力勤资源(02245) - 2024 - 中期财报

Company Information Chairman's Report Chairman Cai Jianyong reports significant H1 2024 achievements in project construction, capacity, and sales, driving double-digit revenue and profit growth despite nickel price volatility, while focusing on stable progress and transformation Key Financial Performance H1 2024 | Metric | Amount (RMB) | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | 10.878 billion | +17.2% | | Net Profit Attributable to Parent | 0.587 billion | +73.5% | Key Business Output H1 2024 | Business Segment | Output/Trade Volume | Notes | | :--- | :--- | :--- | | Nickel Ore Trade | Over 5 million tonnes | - | | RKEF Project (Pyrometallurgy) | Over 50 thousand metal tonnes of nickel | HJF Project Phase I output | | HPAL Project (Hydrometallurgy) | Approx. 39 thousand metal tonnes of nickel | - | - In H1 2024, global nickel resource prices fluctuated due to changes in supply-demand dynamics; prices initially rose due to Indonesian nickel ore quota approvals and New Caledonia's political situation, then fell as market sentiment cooled and macroeconomic data weakened, compressing producers' profit margins[21] - Looking ahead, the company believes that downstream demand will benefit from policy boosts such as equipment upgrades and consumer goods trade-ins, and is confident in continuously providing high-quality nickel products and services through its technological and cost control advantages[23] Management Discussion and Analysis Company's Main Business Overview The company operates across the entire nickel industry chain, from upstream resource integration to downstream applications, with a global industrial layout centered on its Obi Island park in Indonesia Nickel Resource Procurement and Trade Since 2009, the company has engaged in nickel ore and nickel pig iron trade, securing stable laterite nickel ore supply through long-term partnerships with leading miners in key sourcing regions - The company primarily sources laterite nickel ore from the world's richest laterite nickel ore resource countries and regions, including the Philippines, Indonesia, New Caledonia, and Turkey[26] - Established long-term stable cooperative relationships with leading Philippine nickel ore miners (e.g., Nickel Asia) to ensure stable supply of laterite nickel ore[26] Smelting Production The company utilizes both RKEF and HPAL smelting processes, operating a 18,000 metal tonnes nickel pig iron plant in Jiangsu, China, and co-investing in HPAL and RKEF projects on Obi Island, Indonesia, with products serving new energy vehicle and stainless steel markets Key Production Projects and Design Capacities | Project Location | Project Type | Annual Design Capacity | | :--- | :--- | :--- | | Jiangsu, China | RKEF Nickel Pig Iron Production | 18,000 metal tonnes of nickel pig iron | | Obi Island, Indonesia | HPAL Project (Hydrometallurgy) | 120,000 metal tonnes of nickel-cobalt compounds | | Obi Island, Indonesia | RKEF Project (Pyrometallurgy) | 280,000 metal tonnes of nickel pig iron | Equipment Manufacturing and Sales Since 2018, the company's subsidiary Xi'an Pengyuan has provided critical equipment and technical support for its Obi and Jiangsu plants, enhancing production processes - Subsidiary Xi'an Pengyuan specializes in manufacturing and selling nickel product production equipment, providing key components for some Obi project production equipment and technical upgrade support for the Jiangsu plant[29] Company's Core Competencies The company's core competencies include a complete nickel industry ecosystem, cost and efficiency advantages from advanced smelting technologies, stable upstream resource supply, a high-quality customer base, and a commitment to ESG principles Complete Industrial Ecosystem The company covers the entire nickel industry chain, ensuring precise procurement through global supply chains and specialized assaying, while its Obi Island industrial park integrates resources, production, and infrastructure for a circular economy - The company established an independent industrial park on Obi Island, Indonesia, where intermediate products (e.g., sulfuric acid, steam, coal gas) generated during production are recycled, maximizing resource utilization efficiency and embodying green production and circular economy principles[30] Technological and Cost Advantages The company holds significant technological and cost advantages in both HPAL and RKEF smelting, achieving rapid HPAL ramp-up with low cash costs and applying innovative RKEF practices to reduce energy and production costs, while actively pursuing R&D partnerships - Hydrometallurgy: The HPAL project utilizes third-generation HPAL technology, making it one of the lowest cash cost nickel-cobalt compound production projects, achieving full capacity within 2 months of commissioning[33] - Pyrometallurgy: Applied Jiangsu plant's technology and management experience to the Indonesian RKEF project, innovating and upgrading based on local raw material characteristics to reduce energy consumption and production costs[34] - Continuous R&D: Collaborating with institutions like China ENFI and Beijing University of Technology, HPAL project tailings treatment technology development is nearing completion, with plans to prepare for the construction of a demonstration plant[35] Long-term Stable Core Upstream Resource Supply The company ensures stable nickel ore supply through co-investment in Indonesian Obi projects and over ten years of long-term partnerships with leading miners in the Philippines - In Indonesia, partner-owned mining resources on Obi Island provide stable nickel ore raw material supply for the company's smelting projects[36] - In the Philippines, established over ten years of cooperative relationships with miners such as Nickel Asia and CTP Construction and Mining Corp[36] Long-term Cooperative High-Quality Customer Base The company maintains long-term stable partnerships with major domestic and international manufacturers, serving as China's largest nickel ore trader for the stainless steel industry and securing long-term agreements with new energy vehicle precursor/cathode material enterprises - Stainless Steel Industry: As China's largest nickel ore trading company, established long-term and stable relationships with large and industry-leading companies for the supply of nickel ore and nickel pig iron[38] - New Energy Vehicle Industry: Signed long-term cooperation agreements with multiple precursor/cathode material enterprises, and leveraged trade advantages to sell some products to traders[38] ESG Sustainable Development Philosophy The company has established a comprehensive ESG framework, including a Board ESG Committee, integrating sustainable development across operations, participating in national R&D, and achieving multiple ISO certifications for its products and subsidiaries - The company has established a comprehensive ESG operating mechanism and formed a Board ESG Committee[39] - The company and its subsidiaries have obtained ISO14001 (Environmental Management), ISO45001 (Occupational Health and Safety), and ISO9001 (Product Quality Management) certifications[39] Business Review In H1 2024, the company achieved robust business growth with revenue up 17.2% and net profit up 73.5%, driven by full commissioning of HJF and increased HPAL output, offsetting price declines with volume gains, while Obi projects continue to advance Market Environment Downstream market demand improved in H1 2024, with China's stainless steel production and consumption growing by 5.9%, and new energy vehicle production and sales increasing by 30.1% and 32% respectively - Stainless Steel Market: In H1 2024, China's stainless steel output was 18.8 million tonnes, a year-on-year increase of 5.9%; apparent consumption was 15.7 million tonnes, a year-on-year increase of 5.9%[43] - New Energy Vehicle Market: In H1 2024, China's new energy vehicle production and sales reached 4.929 million units and 4.944 million units respectively, with year-on-year increases of 30.1% and 32% respectively[44] Nickel Resource Procurement and Trade Review As a leading nickel ore trader in China, the company achieved stable trade business growth by optimizing sales strategies and deepening customer relationships, with nickel ore trade volume exceeding five million tonnes - During the reporting period, the company's nickel ore trade volume exceeded five million tonnes, achieving steady business growth[47] Nickel Product Smelting Production Review The company's Indonesian Obi projects show strong smelting production, with HPAL yielding approximately 39 thousand metal tonnes of nickel and HJF over 50 thousand metal tonnes, while HPL exceeds capacity, ONC reaches design capacity, and KPS construction progresses Key Project Progress H1 2024 | Project | Progress | | :--- | :--- | | HPAL Project (Hydrometallurgy) | Achieved output of approximately 39 thousand metal tonnes of nickel. HPL project capacity utilization exceeded 100%, and ONC project reached annual design capacity | | RKEF Project (Pyrometallurgy) | HJF project achieved output of over 50 thousand metal tonnes of nickel. KPS project construction is progressing steadily, with core equipment arriving sequentially | Financial Review In H1 2024, total revenue grew 17.2% to RMB 10.878 billion, gross profit increased 16.6% to RMB 1.827 billion, and net profit attributable to parent surged 73.5% to RMB 0.587 billion, driven by trade and associate profits, though the current ratio decreased from 1.1x to 1.0x Revenue Analysis Total revenue increased 17.2% to RMB 10.878 billion, with trade revenue up 25.4% to RMB 6.117 billion driven by nickel pig iron, and production revenue up 7.0% to RMB 4.356 billion due to HPAL Phase III, partially offset by price declines Revenue by Business Segment (For the Six Months Ended June 30) | Business Segment | 2024 (RMB thousand) | Share (%) | 2023 (RMB thousand) | Share (%) | | :--- | :--- | :--- | :--- | :--- | | Nickel Product Trade | 6,116,648 | 56.2 | 4,879,374 | 52.6 | | - Laterite Nickel Ore | 1,292,668 | 11.9 | 1,324,447 | 14.3 | | - Nickel Pig Iron | 4,823,980 | 44.3 | 3,231,814 | 34.8 | | - Nickel-Cobalt Compounds | – | – | 323,113 | 3.5 | | Nickel Product Production | 4,356,492 | 40.1 | 4,072,774 | 43.8 | | - Nickel Pig Iron | 572,553 | 5.3 | 866,620 | 9.3 | | - Nickel-Cobalt Compounds | 3,783,939 | 34.8 | 3,206,154 | 34.5 | | Equipment Manufacturing and Sales | 95,048 | 0.9 | 100,425 | 1.1 | | Other | 309,800 | 2.8 | 231,533 | 2.5 | | Total | 10,877,988 | 100.0 | 9,284,106 | 100.0 | Gross Profit and Gross Margin Analysis Overall gross profit increased 16.6% to RMB 1.827 billion, with gross margin at 16.8%; trade gross profit surged 58.1% to 4.5% margin, while production gross profit grew 10.0% to 34.5% margin, despite unit price declines - Trade business gross margin increased from 3.5% to 4.5%, primarily due to the full commissioning of the HJF project and increased procurement and sales of traded nickel pig iron[57] - Production business gross margin increased from 33.6% to 34.5%; however, the gross margin for self-produced nickel pig iron sharply decreased from 8.6% to 0.8% due to falling market prices and reduced sales volume[57] Operating Expenses and Profit Analysis Selling expenses rose with sales, administrative expenses increased 9.1%, and other operating expenses decreased 25.9% due to lower exchange and futures losses, despite RMB 142 million intangible asset impairment; share of associate profit surged to RMB 123.8 million, leading to a 56.1% increase in profit before tax to RMB 993 million - Other operating expenses decreased by 25.9% to RMB 243 million, mainly due to reduced exchange losses and futures-related investment losses; however, an impairment of RMB 142 million for intangible assets (customer relationships) was recognized during the reporting period[61] - Share of profit from associates significantly increased from RMB 10.1 million to RMB 123.8 million, primarily due to a substantial increase in profit after the full commissioning of the RKEF Phase I project (HJF)[63] - Half-year profit increased by 46.6% to RMB 970 million, with net margin improving from 7.1% to 8.9%[68] Capital Structure and Risk As of June 30, 2024, current assets were RMB 12.019 billion, current ratio decreased from 1.1x to 1.0x, total debt increased to RMB 14.241 billion with gearing at 0.9, and H1 capital expenditure was RMB 3.290 billion, with key risks being foreign exchange and nickel price volatility - Current ratio (current assets/current liabilities) decreased from 1.1x at the end of 2023 to 1.0x as of June 30, 2024[69] - As of June 30, 2024, total debt was RMB 14.241 billion (end of 2023: RMB 11.532 billion), and the capital gearing ratio (total interest-bearing bank borrowings/total equity) remained at 0.9[72][73] - Key risks include nickel metal price volatility risk and exchange rate fluctuation risk[81][83] Outlook The company's future strategy focuses on completing Obi Island projects, enhancing R&D in resource utilization and energy efficiency, expanding upstream resource channels, and building a replicable nickel resource ecosystem through infrastructure development and circular economy initiatives - Complete existing project construction: Systematically advance the construction of HPAL project's ONC and RKEF project's KPS, gradually achieving capacity release[84] - Enhance R&D capabilities: Identified key future R&D directions including comprehensive utilization of metal resources in laterite nickel ore, energy conservation and emission reduction, and intelligent control[85] - Expand upstream resource channels: Plans to continuously expand upstream resource channels and seek quality nickel ore investment opportunities to ensure stable resource supply[86] - Build an ecosystem: Advance Obi Island infrastructure construction (e.g., photovoltaic power generation, port, airport), deepen synergistic effects, and develop the capability to replicate and export the successful Obi project model to other regions[87] Corporate Governance and Other Information Corporate Governance Practices During the reporting period, the Group generally complied with the Corporate Governance Code, except for the combined roles of Chairman and General Manager held by Mr. Cai Jianyong, which the Board deems beneficial given his experience and the balanced board composition - During the reporting period, the company complied with the corporate governance code, but the roles of Chairman and General Manager were held by the same person (Mr. Cai Jianyong), deviating from Code Provision C.2.1[89] Shareholdings of Directors, Supervisors and Major Shareholders The report details shareholdings of directors, supervisors, chief executives, and major shareholders as of June 30, 2024, with Chairman Cai Jianyong holding approximately 61.42% of shares, and key H-shareholders including Feng Yi (16.94%) and CICC International (2.76% long, 2.72% short) Shareholdings of Selected Directors and Supervisors (As of June 30, 2024) | Name | Share Class | Number of Shares Held (Long Position) | Percentage of Total Shares | | :--- | :--- | :--- | :--- | | Mr. Cai Jianyong | Unlisted Shares | 955,581,000 | 61.42% | | Ms. Fei Feng | Unlisted Shares/H-shares | 33,692,500 | 2.17% | | Mr. Cai Jianwei | Unlisted Shares | 10,406,000 | 0.67% | Pre-IPO Share Incentive Scheme The company adopted a Pre-IPO Share Incentive Scheme in October 2021, issuing 25,915,000 restricted domestic shares to eligible employees for talent retention, with shares to be released from lock-up over four years post-listing - The scheme was adopted on October 20, 2021, issuing 25,915,000 restricted domestic shares to eligible employees at a subscription price of RMB 3.02 per share[109] - Granted restricted domestic shares will be released from lock-up over a four-year period, with 25% released annually[116] Use of Proceeds from Listing Net proceeds from global offering were approximately HKD 3.6 billion, with HKD 3.255 billion (90.4%) utilized by June 30, 2024, primarily for Obi Island projects and CBL capital injection, while HKD 346 million remains for potential Indonesian nickel ore investments by end of 2025 Use of Proceeds from Listing and Utilization (As of June 30, 2024) | Purpose | Net Proceeds Available (million HKD) | Net Proceeds Utilized (million HKD) | Unutilized Proceeds (million HKD) | Expected Utilization Time | | :--- | :--- | :--- | :--- | :--- | | Obi Island Project Development and Construction | 2,030.7 | 2,030.7 | 0 | - | | Additional Capital Injection into CBL | 864.1 | 864.1 | 0 | - | | Potential Nickel Ore Resource Investment | 345.6 | 0 | 345.6 | By end of 2025 | | Working Capital and General Corporate Purposes | 360.0 | 360.0 | 0 | - | | Total | 3,600.4 | 3,254.8 | 345.6 | | Unaudited Interim Condensed Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, revenue reached RMB 10.878 billion (+17.2%), gross profit RMB 1.827 billion (+16.6%), profit for the period RMB 970 million (+46.6%), and net profit attributable to parent RMB 587 million (+73.5%), with basic EPS at RMB 0.38 Condensed Consolidated Statement of Profit or Loss (For the Six Months Ended June 30) | Item (RMB thousand) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 10,877,988 | 9,284,106 | | Gross Profit | 1,827,444 | 1,567,404 | | Profit Before Tax | 993,315 | 636,215 | | Profit for the Period | 970,381 | 662,024 | | Profit Attributable to Owners of the Parent | 586,934 | 338,386 | | Basic Earnings Per Share (RMB) | 0.38 | 0.22 | Consolidated Statement of Financial Position As of June 30, 2024, total assets were RMB 34.882 billion (+14.1%), total liabilities RMB 19.695 billion, and total equity RMB 15.188 billion, with non-current assets increasing to RMB 22.864 billion and the current ratio decreasing from 1.1x to 1.0x Condensed Consolidated Statement of Financial Position (As of June 30) | Item (RMB thousand) | 2024 (Unaudited) | 2023 (Audited) | | :--- | :--- | :--- | | Total Non-current Assets | 22,863,579 | 20,400,855 | | Total Current Assets | 12,018,823 | 10,278,853 | | Total Assets | 34,882,402 | 30,679,708 | | Total Current Liabilities | 11,857,546 | 9,285,573 | | Total Non-current Liabilities | 7,837,250 | 7,908,785 | | Total Liabilities | 19,694,796 | 17,194,358 | | Net Assets | 15,187,606 | 13,485,350 | | Equity Attributable to Owners of the Parent | 9,538,020 | 9,185,546 | Consolidated Statement of Cash Flows For the six months ended June 30, 2024, net cash outflow from operations was RMB 102 million, from investing activities RMB 3.278 billion, and net cash inflow from financing activities was RMB 2.745 billion, resulting in period-end cash and cash equivalents of RMB 3.958 billion Condensed Consolidated Statement of Cash Flows (For the Six Months Ended June 30) | Item (RMB thousand) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash (Used in)/From Operating Activities | (102,247) | 104,044 | | Net Cash Used in Investing Activities | (3,277,729) | (3,862,853) | | Net Cash From Financing Activities | 2,745,237 | 4,851,384 | | Net (Decrease)/Increase in Cash and Cash Equivalents | (634,739) | 1,092,575 | | Cash and Cash Equivalents at End of Period | 3,958,055 | 5,629,780 | Notes to Financial Information The financial notes detail accounting policies, segment information, and related party transactions, highlighting Mainland China as the primary revenue source (>85%), Indonesia as the location for most non-current assets, and significant transactions and guarantees with associates and related parties Note 3: Operating Segment Information Management views the Group as a single operating segment, with Mainland China contributing 86.0% of external customer revenue, and 85.4% of non-current assets located in Indonesia, while two major customers contributed 18.6% and 11.0% of total revenue External Customer Revenue by Geographical Location (For the Six Months Ended June 30) | Region | 2024 (RMB thousand) | 2023 (RMB thousand) | | :--- | :--- | :--- | | Mainland China | 9,353,440 | 8,915,732 | | Indonesia | 600,103 | 284,098 | | Other | 924,445 | 84,276 | | Total | 10,877,988 | 9,284,106 | Non-current Assets by Geographical Location | Region | As of June 30, 2024 (RMB thousand) | As of December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Mainland China | 3,305,999 | 2,894,776 | | Indonesia | 19,404,935 | 17,357,815 | | Total | 22,710,934 | 20,252,591 | Note 15: Related Party Transactions During the period, the Group engaged in significant related party transactions, including RMB 3.84 billion in nickel product purchases from associate HJF, with RMB 610 million due from HJF and RMB 890 million due to related parties, and provided RMB 3.543 billion in guarantees for HJF's bank borrowings - During the reporting period, the Group purchased RMB 3.84 billion worth of nickel products from associate HJF and sold RMB 364 million worth of raw materials to it[172] - As of June 30, 2024, the company provided guarantees amounting to RMB 3.543 billion for certain bank borrowings of associate HJF[176] Summary of Outstanding Balances with Related Parties (As of June 30, 2024) | Item | Amount (RMB thousand) | | :--- | :--- | | Amounts Due from an Associate (HJF) | 610,031 | | Amounts Due to an Associate (HJF) | 281,942 | | Amounts Due to Related Parties (TBP, prepayment for non-controlling shareholder's capital injection) | 891,575 |