HUAYOU COBALT(603799) 摩根大通·2024-10-24 10:13Investment Rating - The stock rating for Zhejiang Huayou Cobalt Co Ltd is Equal-weight [4] - The industry view is Attractive [4] Core Insights - The company reported a net profit of Rmb1.3 billion for 3Q24, which is an increase from Rmb1.1 billion in 2Q24 and Rmb928 million in 3Q23, exceeding expectations [1] - The 9M24 profit reached Rmb3 billion, reflecting a year-on-year increase of 0.2% [1] - The good performance is attributed to better-than-expected gross profit margin (GPM), lower tax expenses, and reduced minority interest [2] - The GPM for 3Q24 was 18.8%, only slightly down by 1.4 percentage points quarter-on-quarter [2] - The effective tax rate decreased to 3.7% in 3Q24 from 4.4% in 2Q24 and 12.1% in 3Q23 [2] - Minority interest accounted for 4.5% of profit after tax, significantly lower than 35.5% in 2Q24 [2] Capacity Expansion - Ongoing construction of the Huaneng 50kt ternary precursor project in Indonesia was completed on October 18, 2024 [2] - The Huaxiang 50kt sulfuric nickel project and the Hungary 25kt cathode material projects are currently under construction [2] Financial Metrics - The price target for the stock is set at Rmb27.00, indicating a downside of 7% from the current price of Rmb28.95 [4] - The market capitalization is Rmb49.507 billion, with an enterprise value of Rmb70.270 billion [4] - Projected EPS for fiscal years ending in 2023, 2024, 2025, and 2026 are Rmb2.05, Rmb1.34, Rmb1.42, and Rmb2.00 respectively [4] - Revenue projections for the same fiscal years are Rmb65.936 billion, Rmb63.642 billion, Rmb66.235 billion, and Rmb70.900 billion respectively [4] - The P/E ratio is projected to be 16.1 for 2023 and 21.5 for 2024 [4]