Core Viewpoint - Despite establishing partnerships with multiple industry giants and continuously exploring new application areas, the company's performance is under pressure in the first half of 2025, with declines in both revenue and net profit [1][3]. Financial Performance - In the first half of 2025, the company reported revenue of 307 million yuan, a decrease of 15.37% compared to 363 million yuan in the same period last year [1][3]. - The net profit attributable to shareholders was 69.66 million yuan, down 27.72% year-on-year, while the net profit after deducting non-recurring items was 65.56 million yuan, a decline of 29.81% [1][3]. - The company's main product output decreased by 2.12% year-on-year, with total sales of 19,700 tons, down 1.05% from the previous year [1][3]. Market Position and Product Overview - The company is a leading player in the field of polymer material environmental additives, with a core product system including THEIC, titanium esters, DBM, SBM, and acetylacetone salts [3]. - Despite the decline in sales, the company maintains a strong market position, with a market share of approximately 80% for THEIC products from 2021 to 2023 and around 41% for titanium esters in 2021 and 2022 [3]. Industry Trends - The global chemical demand is recovering, with the Asian market leading growth; however, some domestic downstream industries are experiencing mixed performance [4]. - The domestic paint industry saw a total output decline of 1.6% year-on-year, while plastic products showed signs of recovery, although growth rates need further observation [4]. Investment Projects and Challenges - The company has faced intensified industry competition, prompting adjustments to its investment projects, including the postponement of the DBM expansion project [5][6]. - The DBM expansion project, initially planned for 2027, has been re-evaluated due to market conditions and the need for a comprehensive assessment of production capabilities [6][7]. New Growth Areas - The company is actively exploring new markets, particularly in the renewable energy lithium battery materials sector, which is seen as a significant growth opportunity [9]. - Collaborations with well-known lithium battery material companies indicate recognition of the company's products within the core enterprises of the new energy industry [9]. - The company has also made progress in emerging application scenarios, such as flame retardants and polyurethanes, which may become new performance growth points [9].

Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [6]. Core Views - The company has demonstrated strong profitability resilience despite a decline in metal prices, with cobalt, nickel, and lithium margins reaching historical lows. The current price levels provide a foundation for potential increases, which could significantly boost the company's performance [7][9]. - The company has established a comprehensive business structure with five major sectors: new energy, new materials, Indonesian nickel, African resources, and recycling [13][16]. - The report highlights the cyclical nature of metal prices, indicating that cobalt prices are at a long-term historical low, with potential for substantial increases due to demand growth and supply constraints [33][51]. Summary by Sections Market Performance - As of April 28, 2025, the closing price of the company's stock is 33.36 yuan, with a market capitalization of approximately 56.76 billion yuan [4]. Financial Forecast and Valuation - The projected revenue for 2023 is 66.30 billion yuan, with a forecasted decline to 60.95 billion yuan in 2024, followed by a recovery to 70.44 billion yuan in 2025. The net profit attributable to the parent company is expected to rise from 3.35 billion yuan in 2023 to 5.07 billion yuan in 2025 [6][8]. - The report anticipates a price-to-earnings (P/E) ratio of 11.19 for 2025, which is below the industry average, indicating potential undervaluation [8]. Investment Logic - The company has maintained stable revenue and profitability despite fluctuations in metal prices, with nickel and lithium segments showing growth while cobalt has declined. The overall business structure is resilient, with significant upside potential if metal prices recover [20][29]. - The report emphasizes that the current low prices of cobalt, nickel, and lithium create a favorable environment for future price increases, which could enhance the company's earnings significantly [7][9]. Cobalt Market Insights - Cobalt prices are currently at a long-term low, with expectations for a significant rebound driven by demand growth and supply constraints, particularly from the Democratic Republic of Congo [33][51]. - The report notes that the recent export ban from the Democratic Republic of Congo could further tighten supply, enhancing the potential for price increases [36]. Nickel Market Insights - Nickel supply is dominated by Indonesia, which is expected to account for 60% of global production in 2024. The report indicates that while supply is increasing, rising costs and the closure of high-cost mines may stabilize prices [53][60]. Lithium Market Insights - The lithium market is experiencing a supply-demand mismatch, with prices at historical lows. The report forecasts that the price of lithium carbonate will stabilize around 80,000 yuan per ton in 2025, with potential for increases as demand recovers [67][72].