Event: the company's total revenue reached an all-time high in 2021. In 2021, the company achieved operating income of 4.35 billion yuan, an increase of 93% over the same period last year, a net profit of 663 million yuan, an increase of 98.25% over the same period last year, and a non-net profit of 694 million yuan, an increase of 268.94%. Basic earnings per share were 2.15 yuan, an increase of 82.20 percent over the same period last year. The percentage of Roe per share was 15.07 percent, an increase of 3.24 percent over the previous year. It is proposed to pay a cash dividend of 4.30 yuan (including tax) for every 10 shares. 2021Q4's single-quarter operating income was 1.146 billion yuan, an increase of 90.57% over the same period last year and 1.95% over the same period last year; the net profit from its mother was 177 million yuan, up 2.63% from the same period last year and 35.56% from the previous year; and its non-net profit was deducted from 151 million yuan, an increase of 256% over the same period last year and a slight decrease of 0.46% from the previous month.

The simultaneous increase in the quantity and price of copper and cobalt led to an increase in performance: 1) volume: the production and sales of copper products in 2021 was 39900 tons / 34600 tons, an increase of 46.09% and 26.64% respectively over the same period last year, benefiting from the gradual release of 20,000 tons of electrolytic copper production capacity of the subsidiary cold sharp metal; cobalt products production and sales of 7900 tons / 8200 tons, an increase of 24.82% and 38.08% respectively over the same period last year, thanks to the increase in the production of cobalt hydroxide in Congo. In 2022, the company will comprehensively promote the progress of the project, and the 5000 tons of cobalt hydroxide production line of the subsidiary Hanrui Metal is expected to be put into production in the second quarter of 2022, which will further expand the company's cobalt product capacity and continue to increase its performance. 2) Price: the price of copper and cobalt increased by more than 40% during the reporting period, and the performance elasticity is considerable. In 2021, the average price of LME copper was 9294 US dollars per ton, an increase of 49.9 percent over the same period last year. The average price of MB cobalt is $23.98 per pound, up 54 per cent from a year earlier. Thanks to price elasticity, the company's gross profit margin for cobalt products increased by 19 percentage points to 34.38%.

The three fee rates continue to improve while increasing investment in research and development to consolidate the leading position of cobalt powder: in 2021, the company's three fees totaled 229 million yuan, accounting for 5.27% of revenue, down 2.68pct from the same period last year. Of this total, the sales expense was 12 million yuan, down 22.52% from the same period last year, mainly due to the decrease in the company's logistics and sales expenses; the management expenses were 169 million yuan, an increase of 40.66% over the same period last year; and the financial expenses were 48 million yuan, an increase of 10.43% over the same period last year. In addition, the company spent 40 million yuan on research and development in 2021, an increase of 6.7% over the same period last year, mainly invested in cobalt powder process research and development, ranked third in the global market share of cobalt powder in 2020, and increased R & D investment or further consolidated its leading position in the industry.

Strengthen the layout of the new energy industry chain, extend the industrial chain to expand the growth space: the company raised 1.868 billion yuan to build a new Ganzhou Hanrui 10,000 tons / year metal volume cobalt new material, 26,000 tons / year ternary precursor project, the first phase design capacity of 10,000 tons / year (metal volume). At present, the infrastructure project is basically completed, equipment installation is under way, trial production is expected at the end of June 2022, and Q3 production is expected to reach production in 2023. The raw material of crude cobalt hydroxide produced by Congo Matt, a subsidiary of Hanrui Cobalt Industry, is used. The second phase will adopt the hydrometallurgical production line of ternary battery waste and build a ternary precursor project of 26,000 tons per year, which is expected to reach production by 2024. After the completion of the project, the company successfully cut into the new energy smelting processing track by upstream copper and cobalt smelters to add new highlights of profit growth.

Investment suggestion: we increase the company's operating income from 2022 to 2024 to 82.30, 111.76, 12.851 billion yuan, and expect to achieve net profit of 15.79,18.47 and 2.112 billion yuan, corresponding to EPS of 5.10,5.97,6.82 yuan per share, respectively. At present, the stock price corresponds to PE of 11.4,9.7,8.5 times. Give a "buy-A" rating, with a 6-month target price of 80 yuan per share.

Risk tips: project progress is not as expected, copper and cobalt and other major metal price fluctuations risk, overseas business policy environmental risk and so on.