HUAYOU COBALT(603799) 兴业证券·2024-08-27 10:15Investment Rating - The report maintains a "Buy" rating for the company, with a target price based on expected earnings growth and market conditions [4][8]. Core Insights - The company's net profit for H1 2024 decreased by 19.87% year-on-year, primarily due to a significant drop in lithium battery material prices, with the average price of ternary materials falling by 49.29% [1][3]. - Despite the decline in profitability, the company achieved stable growth in production and sales volumes, particularly in nickel products, which saw a year-on-year increase of over 40% [1][3]. - The report highlights the successful ramp-up of production capacity in Indonesia, with several nickel projects reaching or exceeding their production targets [2][4]. Financial Performance Summary - For H1 2024, the company reported revenue of 30.05 billion yuan, a decrease of 9.88% year-on-year, and a net profit of 1.671 billion yuan [3][4]. - The projected net profits for 2024-2026 are 3.583 billion, 4.581 billion, and 4.983 billion yuan, respectively, with corresponding EPS of 2.10, 2.68, and 2.91 yuan [4][5]. - The company's gross margin is expected to improve gradually, with forecasts of 15.1% in 2024 and 16.1% in 2025 [5][6]. Production and Capacity Developments - The company is advancing its integrated layout in lithium battery materials, with several projects in Indonesia and domestic regions progressing well [2][4]. - The report notes that the company has successfully achieved production capacity for various nickel and lithium projects, which is expected to enhance its market position [2][4]. Market Conditions and Price Trends - The report indicates that the prices of lithium battery materials have experienced significant volatility, impacting the company's profitability [1][4]. - Nickel prices have shown a notable increase, contributing to improved profitability in Q2 2024, with the average price of electrolytic nickel rising by 7.84% [3][4].