Core views

In the first three quarters of 2024, the company achieved revenue of 45.49 billion yuan, -11% year-on-year, net profit of 3.02 billion yuan, or +0.2% year-on-year, after deducting 3.04 billion yuan, or +12% year-on-year. Among them, Q3 revenue was 15.44 billion yuan, -13% YoY, +2% month-on-month, net profit 1.35 billion yuan, +45% YoY, +18% month-on-month, minus 1.29 billion yuan, +45% YoY and +9% month-on-month. On the nickel side, Huayue Huafei continues to produce at full capacity. We estimate that the company shipped 0.137 million tons of nickel products in the first three quarters of 2024, of which 0.084 million tons of electric nickel were shipped, accounting for about 60%; the self-sufficiency rate for nickel intermediates is increasing month by month, and currently exceeds 70%.

occurrences

The company published its 2024 triennial report.

In the first three quarters of 2024, the company achieved revenue of 45.49 billion yuan, -11% year-on-year, net profit of 3.02 billion yuan, or +0.2% year-on-year, after deducting 3.04 billion yuan, or +12% year-on-year.

Among them, Q3 revenue was 15.44 billion yuan, -13% YoY, +2% month-on-month, net profit 1.35 billion yuan, +45% YoY, +18% month-on-month, minus 1.29 billion yuan, +45% YoY and +9% month-on-month.

Brief review

In terms of nickel sales, we estimate that the company shipped 0.137 million tons of nickel products in the first three quarters of 2024, of which 0.084 million tons of electric nickel were shipped, accounting for about 60%; 2024Q3 nickel products shipped 0.06 million tons, +45% month-on-month, of which 0.043 million tons of electric nickel were shipped, doubling month-on-month and growing significantly. The self-sufficiency rate for nickel intermediates is increasing month by month and is currently over 70%.

In terms of nickel production capacity, the nickel projects laid out by the company in the early stages have been put into operation one after another, including:

Huafei: The 0.12 million ton nickel metal hydrometallurgical smelting project ended production in Q1, and remained at full capacity in Q3;

Huayue: The 0.06 million-ton nickel metal-weight hydrometallurgical smelting project continued to steadily exceed production in 2024Q3, and the entire SCM slurry pipeline was completed;

Huake: Stable operation of the 0.045 million ton high nickel metal content ice nickel project;

Huaxiang: The project to produce 0.05 million tons of nickel sulfate per year is progressing in an orderly manner.

In terms of nickel profit, the average spot price of 2024Q3 LME nickel was 0.0163 million US dollars/ton, down 0.021 million US dollars/ton. Combined with the impact of RMB appreciation, the earnings of the company's overseas subsidiaries were drastically reduced, and minority shareholders' equity also declined sharply after being shared according to the shareholding ratio. The profit and loss of minority shareholders of the 2024Q3 company was 0.064 billion yuan, down 0.568 billion yuan from the previous month. However, benefiting from the relative stability of the downstream electric nickel market and a significant increase in the company's Q3 electric nickel shipments, electric nickel sales still contributed considerable profits.

In terms of lithium battery materials, the company's ternary material products have covered global power battery factories such as Ningde Era, LGES, Samsung SDI, Guoxuan Hi-Tech, Everweft Lithium Energy, and Yuanjing AESC. The terminals are used in domestic and foreign car brands such as Tesla, BMW, Stellantis, Volkswagen, Hyundai, GM, Ford, Daimler, Renault, ZEEKR, Changan, and Geely. Shipments of 2024Q3 ternary materials were affected by weak demand in Europe and the rapid decline in domestic prices, and shipments declined month-on-month.

In terms of other metal materials, 2024Q3's copper, cobalt, and lithium shipments remained stable from month to month.

In terms of solid-state batteries, the company's ultra-high nickel ternary cathode materials have been used in 100-ton batches for eVTOL low-altitude aircraft and semi-solid state vehicle power batteries, and are simultaneously developing ultra-high nickel ternary and lithium-manganese-based dual-path solid-state battery materials.

Profit forecast: The company's net profit to mother is expected to be 4.05 and 4.34 billion yuan in 2024-25, corresponding to 13.6 and 12.7 times PE.

Risk analysis

1) Downstream NEV production and sales fall short of expectations: the sales side may be affected by weak demand and fall short of expectations; the production side may be affected by large fluctuations in upstream raw material prices, power restrictions, etc., which in turn affects the company's related business shipments and profitability.

2) The rise in raw material prices exceeded expectations: Since 2021, raw material prices have fluctuated greatly in stages. High prices and instability have had a certain impact on terminal demand, while at the same time disrupting the company's short-term performance.

3) The company's key projects fall short of expectations: As a participant in the new energy circuit, the promotion of key projects is the key to supporting revenue and profit, and is also a reflection of the company's growth. Failure to advance key projects as expected will affect current and long-term performance.