Key points of investment

The company issued a 24H1 performance forecast, which is in line with market expectations. 24H1's net profit to mother was 0.83-0.93 billion yuan, an increase of 8%-21%, after deducting non-net profit of 0.74-0.84 billion yuan, an increase of 22%-39%. Among them, 24Q2's net profit was 0.45-0.55 billion yuan, up 6%-29%, and the average forecast value was 0.5 billion yuan, +17%/+32% year-on-month; 24Q2 deducted non-net profit of 0.4-0.5 billion yuan, an increase of 13%-42%, and 18% to 47%, in line with market expectations.

Q2 Precursor shipments remained flat month-on-month, and nickel-cobalt processing contributed part of the profit. The sales volume of the company's 24H1 nickel-cobalt-phosphorus four-series products exceeded 0.14 million tons, an increase of 15% over the previous year. Among them, we expect to ship about 0.115 million tons of precursors in the first half of the year and 0.057 million tons in Q2, which is the same level from month to month. We expect to ship 0.24-0.25 million tons for the whole year, an increase of 5-10%; we expect iron phosphate production capacity to release 0.04-0.05 million tons for the whole year, with a total shipment of 0.28-0.3 million tons, the same An increase of 10%. On the profit side, when combined with the profit from outsourced cobalt and nickel processing, we estimate that the net profit per ton of the 24Q2 three-pre precursor remained at 0.004 million+, contributing about 0.25 billion yuan to the net profit, and the loss of other products was about 0.02-0.03 billion yuan.

Q2 Nickel prices rose and electric nickel profits increased, and China Youth and NNI contributed to the increase in production in the second half of the year. In terms of nickel smelting, the overall output of the company's 24H1 Indonesian nickel products exceeded 0.035 million tons, of which Q2 shipped 0.02 million tons+, an increase of 39%; the company's completed and ongoing production capacity in Indonesia reached 0.2 million gold tons, and the Q2 Emerald Bay 0.055 million ton nickel-iron project was in full operation. In May, production of Zhongqing 2 lines and 4 NNI lines reached production. The monthly output of NNI reached 0.01 million tons. We expect nickel production to rise in 24 0.13-0.14 million tons (equity 0.06-0.07 million tons). Due to the high nickel price, the company's production and sales volume of electrolytic nickel in the first half of the year exceeded 0.037 million tons (equity 0.02 million tons), of which we expect Q2 to ship 0.02 million tons+ (equity 0.01 million ton+). Based on the 0.017 million US dollar nickel price, we estimate the net profit of 0.003 million US dollars+ per ton of electric nickel in Q2, contributing about 0.25 billion yuan to net profit; the company has built an electric nickel production capacity of 0.08 million Tons. Nickel shipments in the second half of the year were still mainly electric nickel. Based on 0.016-0.017 million US dollars, nickel smelting is expected to contribute 1-1.2 billion yuan to net profit for the whole year. As our own nickel deposits continue to be released in the second half of the year, we expect that future costs will still fall by 1,000 US dollars.

Profit forecast and investment rating: We maintain the company's 2024-2026 profit forecast. We expect the company's net profit to be 2.37/2.85/3.47 billion yuan in 2024-2026, an increase of 22%/20%/22%, corresponding to 11x/9.5x/7.8xPE. Considering that the company is the largest domestic precursor manufacturer, we will give 16 times PE in 2024, corresponding to a target price of 40 yuan, and maintain a “buy” rating.

Risk warning: Raw material prices fluctuate more than market expectations, and sales volume and policies fall short of expectations.