LYGEND RESOURCES&TECHNOLOGY(02245.HK)：BUILDING A NICKEL BUSINESS ECOSYSTEM GLOBAL NICKEL LEADER EMERGING

Core Viewpoint - Lygend Resources & Technology is initiated with an OUTPERFORM rating and a target price (TP) of HK$27.56, reflecting a 10x 2026 estimated P/E ratio, due to its leadership in the global nickel industry and integrated operations across the nickel supply chain [1] Company Overview - Lygend Resources & Technology has transitioned from nickel ore trading to industrial operations, establishing a comprehensive presence in the nickel industry chain, including trading, smelting, production, and equipment manufacturing [1] - The company has secured long-term trade and supply agreements with upstream mining companies in the Philippines, Indonesia, and other regions, enhancing its resource stability [1] Competitive Advantages - The construction of a nickel business ecosystem covering the entire industry chain provides Lygend with distinctive competitive advantages, including stable resource supply through equity stakes granted to Indonesian partners [2] - The establishment of independent overseas industrial parks equipped with necessary infrastructure allows for operational autonomy and reduced transaction costs [2] - Collaborations with high-quality resource suppliers and long-term agreements with top-tier LiB material suppliers strengthen the company's position across the industry chain [2] Market Dynamics - The Democratic Republic of the Congo (DRC) has announced a cobalt export quota system, which is expected to lead to a systematic increase in average cobalt prices, as the quotas for 2026-2027 will only account for 44% of its 2024 production [3][4] - The tightening regulations on cobalt export quotas are anticipated to benefit Lygend's hydrometallurgy project in Indonesia, potentially boosting earnings and valuation [4] Financial Projections - The estimated earnings per share (EPS) for Lygend is projected at Rmb1.74 in 2025 and Rmb2.49 in 2026, indicating a compound annual growth rate (CAGR) of 48% from 2024 to 2026 [4] - The stock is currently trading at 10.2x 2025 estimated P/E and 7.0x 2026 estimated P/E, with a target price suggesting a 43% upside [4]