Incidents. On August 28, 2024, the company released its 2024 semi-annual report. In the first half of the year, the company achieved operating income of 20.086 billion yuan, +16.33%; net profit to mother was 0.864 billion yuan, +12.48% year over year; net profit after deduction was 0.767 billion yuan, +26.73% year over year; and net operating cash flow was 1.305 billion yuan, +42.19% year over year.

The commercialization of new products went smoothly, increasing the global production capacity layout. In terms of shipment volume, 2024H1 achieved a positive increase in shipments of nickel, cobalt, phosphorus, and sodium products. Product sales exceeded 0.14 million tons, +15% over the same period last year. In terms of new products, the company insists on technology. The three-pre precursor monocrystalline cobalt-free technology is the first in the industry to achieve mass supply. Solid state battery cathode material precursors have passed international customer certification and achieved small-batch supply. At the same time, medium nickel polycrystalline high voltage and ultra-high nickel polycrystal precursors have also passed international customer certification. On the customer side, we continue our global strategy, including establishing close partnerships with top domestic and international customers such as Tesla, Samsung SDI, LG Chem, SK On, Panasonic, ECOPRO, POSCO, Ningde Times, and Rongbai Technology. In terms of production capacity, the company has improved the global production capacity layout according to downstream demand. The production capacity of the three precursors is 0.3 million tons and the overseas production capacity is 0.23 million tons, the production capacity of cobalt tetroxide exceeds 0.03 million tons, the domestic production capacity of iron phosphate is 0.2 million tons and the overseas production capacity is 0.06 million tons, and the domestic production capacity of sodium precursors is 0.008 million tons. With continuous iteration of new products, customer resources accumulated over many years, and reasonable production capacity layout, the company's business situation is expected to improve further.

Go overseas with determination, and the world's radiation capacity has increased. 1) South Korea: The nickel refining and precursor integrated industrial base construction project promoted by the company and POSCO can achieve an annual nickel refining output of 0.05 million tons and an annual precursor output of 0.11 million tons; 2) Morocco: The company and AL MADA are jointly promoting a project with an annual output of 0.12 million tons of ternary precursors and supporting raw materials, 0.06 million tons of phosphorous materials, and 0.03 million tons of black powder recycling capacity. After completion, the project can generate more than 1 million vehicles per year Motor vehicles provide battery materials, reaching out to European and American customers.

Deeply implement integration and enter the fulfillment period. The company used the advantages of oxygen-rich side blowing and RKEF dual technology routes to establish four major raw material production bases for nickel resource smelting in Indonesia, with a production capacity of nearly 0.2 million tons of metal. Up to now, the Feicui Bay Project and the Debon Project have all been completed and put into operation with a total annual output of 0.055 million gold tons of low ice nickel; Indonesia's NNI 0.08 million gold ton low ice nickel project and Indonesia's Zhongqing New Energy 0.06 million gold ton ice nickel project are all in the phase of climbing capacity. 2024H1's overall output of nickel products in Indonesia exceeded 0.035 million tons, with a year-on-month increase of nearly 40% in the second quarter. Nickel resources are an important raw material for tertiary precursors. The integrated layout helps the company achieve cost savings and increase profit levels, thereby strengthening its voice in the industrial chain.

Investment advice: We expect the company to achieve revenue of 390.6, 448.9 and 52.0 billion yuan in 2024-2026, with year-on-year changes of +14.0%, +14.9%, and +15.9%; net profit to mother of 2, 2.43, and 3.26 billion yuan, with year-on-year changes of +2.8%, +21.3%, and +34.4%. The current stock price corresponds to the 2024-2026 price-earnings ratio of 13, 11, and 8 times, respectively. Considering the further promotion of the company's internationalization+integration, the “recommended” rating is maintained.

Risk warning: NEV sales fall short of expectations, overseas production capacity construction falls short of expectations, etc.