HUAYOU COBALT(SH:603799) Quan Jing Wang·2025-09-01 13:36Core Viewpoint - Company is actively advancing its nickel and cobalt resource development and refining projects, with plans to double its production capacity by 2028, while also optimizing costs in its lithium and copper businesses [2][3][12]. Nickel and Cobalt Resource Development and Refining - The company has three major projects in progress: the Bomara project (61.5% ownership), the Lofat area project (4,000 tons capacity), and the Waku wet process project (6,000 tons capacity), with total nickel-cobalt refining capacity expected to reach 360,000 tons by 2028 [2]. - The company is adjusting the process of its 45,000-ton high-pressure acid leaching project in Indonesia to improve profitability, shifting from a multi-step process to direct processing into liquid stainless steel due to current losses [2]. Lithium Business - The company's lithium business in Zimbabwe has an initial cost of approximately 67,000-68,000 RMB/ton, which is expected to decrease to below 60,000 RMB/ton as new projects come online [3]. - The projected lithium carbonate output for 2025 is 26,000 tons, with a target of 60,000-80,000 tons for 2026, potentially increasing to 120,000 tons if lithium prices are favorable [3]. - A lithium sulfate project is set to be completed by the end of 2025, with production ramping up in early 2026, although it will not fully meet the raw material needs for the planned lithium carbonate output [3]. Copper Business in the Democratic Republic of Congo - The company has a current copper refining capacity of 100,000 tons, with an expected output of 80,000-90,000 tons in 2025, relying on external purchases after its own mines are depleted [5]. - To address power shortages, the company plans to build a 28 MW solar and storage project in the DRC, which is expected to significantly reduce electricity costs and increase profitability [5]. Energy Metal Price Outlook - Nickel prices are currently at a bottom cost line of $15,000-$16,000/ton, with limited upward movement expected due to government regulations in Indonesia [7]. - Cobalt prices are anticipated to rise due to tight supply and low inventory levels, with the company benefiting from its 12,000 tons of cobalt rights [8]. - The reasonable price for lithium carbonate is around 80,000 RMB/ton, with limited room for significant price increases [9]. Financial and Capital Expenditure - The company plans to invest approximately 10 billion RMB annually, focusing on key projects in Indonesia and resource acquisition [11]. - The financing cost is low at 3.6%-3.7%, with a manageable leverage ratio, and the company is encouraging the conversion of convertible bonds to reduce interest expenses [11]. - The company aims to maintain a stable cash flow to cover most capital expenditures, with a target of achieving a net profit of 700-800 million RMB annually from its copper business [5][11].