According to the CITIC Securities Research Report, Liqin Resources (02245) has first-mover advantages and cost advantages in the Indonesian nickel smelting industry. It is the first to enjoy high nickel price dividends. In the future, it will benefit from the sharp expansion of smelting capacity and the high gross profit level brought about by low costs, and is expected to continue to increase profits amid fluctuations in nickel prices.

Net profit attributable to the company in 2022-2024 is estimated to be $23.16/29.79/3,328 billion respectively. Referring to the comparable valuations of listed companies in the same industry (Nornickel, Shengtun Mining and other companies Bloomberg and Wind's consistent expectations for 2023 was 8 times), the company was given 8 times the PE valuation in 2023. The corresponding target market value was HK$28.4 billion, and the corresponding target price was HK$18, covering and giving a “buy” rating for the first time.

The bank said that the company started with a nickel trade business and entered the nickel smelting industry in 2017. In 2018, the company deployed nickel smelting production capacity in Indonesia and successfully built a benchmark hydrosmelting project in the industry. Benefiting from high nickel prices and the successful commissioning of the project, the company achieved net profit of 1.35 billion yuan to its mother in the first half of 2022, a sharp increase of 1469% over the previous year. Furthermore, as the only listed pure nickel company in China, the company has an outstanding market position.