Core Viewpoint - Contemporary Amperex Technology Co., Limited (CATL) experienced a significant decline of over 6% after reaching a new high of 468 HKD, currently trading at 433 HKD with a trading volume of 1.189 billion HKD [1] Company Performance - CATL's board meeting today will consider and approve the interim results for the six months ending June 30, 2025, and discuss the potential distribution of an interim dividend [1] - Recent research from Morgan Stanley indicates that CATL's production capacity growth in recent months is the highest in the industry, despite a slight decline in mid-July [1] - The overall production growth remains robust and exceeds expectations, with the second-quarter profit anticipated to surpass forecasts, projecting sales between 140 to 150 GWh and a year-on-year net profit increase of 25% to 30%, amounting to 15.5 to 16 billion RMB [1]

Summary of China Nonferrous Mining Conference Call Industry Overview - The copper market is currently under pressure due to weakened trading sentiment and a strong US dollar index, but the medium to long-term supply-demand structure remains tight. Global major copper producers saw a nearly 1% year-on-year decline in production in Q1, influenced by supply disruptions from Zijin's Kamoto mine and Teck Resources' tailings issues, maintaining a tight supply outlook [2][3][4]. Company Insights Core Competitiveness - China Nonferrous Mining's core competitiveness lies in its endogenous growth, with plans to double its copper production capacity over the next five years, adding over 150,000 tons of copper capacity through the resumption of existing mines and new projects. By 2035, the company's asset copper capacity is expected to exceed 300,000 tons [2][5][10]. Production and Capacity - The company plans to achieve a total copper production of 286,000 tons of crude and anode copper, 126,000 tons of cathode copper, and 111,100 tons of processed products in 2024, totaling over 500,000 tons of copper products. The self-supply rate from its own mines has remained stable at around 30% since 2021 [4][11]. Financial Performance - The company has shown steady growth in revenue and net profit, with a compound annual growth rate (CAGR) of 13.8% in revenue from 2015 to 2024, projecting 2024 revenue at $3.82 billion, a 5.5% increase year-on-year. The net profit attributable to shareholders is expected to reach 2.08 billion yuan in 2024, a 23.9% increase, marking a new high in recent years [2][7]. Cash Flow and Dividends - The operating cash flow for 2024 is projected at $780 million, a 31.6% increase, with a stable dividend payout ratio above 40%. The total dividend for 2024 is expected to be $167 million, with a payout ratio of 42% [2][9]. Strategic Developments Future Growth Plans - The company has outlined several key projects contributing to its future growth, including: 1. The new Luansha copper project, expected to produce 40,000 tons by 2027. 2. The resumption of the West mine, projected to add 20,000 tons by 2027. 3. The lead-bismuth Samba copper mining project, expected to contribute 20,000 tons by around 2028. 4. The Gongangbof Men Sesa project, anticipated to add 25,000 tons by 2028. 5. The second phase of the lead-bismuth Southeast mine, expected to contribute 45,000 tons by 2030 [10]. Smelting Business - The company has a significant advantage in its smelting operations, particularly in Zambia and the Democratic Republic of the Congo, with total smelting capacity exceeding 500,000 tons. Increased production from its own copper mines is expected to enhance profitability [2][6]. Market Outlook - The company anticipates stable smelting capabilities and increased self-supply rates as its own mines ramp up production. The average copper prices are projected to be $9,500, $10,000, and $10,500 per ton for the years 2025-2027, respectively. The sulfuric acid business is expected to maintain sales around 780,000 tons, with prices adjusting to $200 and $190 per ton [2][14]. Historical Context - Established in 1983, China Nonferrous Mining has evolved into a leading integrated producer with a strong international presence, particularly in regions along the Belt and Road Initiative. The company has a robust management team with extensive operational experience, ensuring efficiency in its operations in Zambia and the Democratic Republic of the Congo [2][8].

Core Insights - The company expects a 16% year-on-year increase in net profit for 2024, with over 2.4 billion in receivables collected, leading to a 32% increase in net cash flow from operating activities [1] Financial Performance - The company maintains an "overweight" rating, slightly adjusting net profit forecasts for 2025-2026 to 1.735 billion (previously 1.795 billion) and 1.806 billion (previously 1.920 billion), while introducing a forecast of 1.882 billion for 2027, corresponding to EPS of 2.13, 2.21, and 2.31 respectively [2] - In 2024, the company achieved operating revenue of 11.886 billion, a decrease of 5% year-on-year, while net profit attributable to shareholders was 1.664 billion, an increase of 16% year-on-year [2] - The net cash flow from operating activities reached 3.273 billion, a 32% increase year-on-year, with the company actively collecting receivables [3] Business Segments - The solid waste management business generated revenue of 6.008 billion, a 7% decrease year-on-year, but net profit increased by 4% to 1.025 billion, with an operating net profit of 1.004 billion, up 10% [3] - The gas business revenue decreased by 7% to 3.758 billion, influenced by a decline in sales price and slight decrease in sales volume, although the gross margin improved [3] - The company is actively expanding its heating business, with a 34% year-on-year increase in heating volume to 1.48 million tons, having signed 17 external heating agreements [3] Strategic Initiatives - The acquisition of Yuefeng Environmental is progressing, with expectations to complete the acquisition by mid-2025 after meeting all preliminary conditions [4] - The acquisition is anticipated to lead to a significant increase in incineration capacity and gradual realization of synergies [4]

Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Views - The company is expected to achieve a revenue growth of 14.7% year-on-year in 2024, reaching 28.66 billion yuan, with a net profit growth of 36.9%, totaling 6.24 billion yuan, both exceeding expectations [1][10] - The company demonstrates strong competitive advantages, with orders growing faster than major brand clients, particularly benefiting from the performance of non-Nike clients [3][53] - The company is positioned to maintain its leading growth rate in the industry, with a target price adjustment to 75-82 HKD, reflecting a PE ratio of 16-17.5x for 2025 [3][54] Revenue and Profitability - Revenue is projected to grow by 14.8% in 2024, with net profit expected to increase by 36.9% [4][56] - The gross profit margin is anticipated to rise by 3.8 percentage points to 28.1% in 2024, with improvements in both the first and second halves of the year [1][10] - The company’s net cash position is 13.4 billion yuan, an increase of 2 billion yuan year-on-year [1] Customer and Product Performance - Performance varies by product category, with sportswear, casual wear, and underwear growing by 9.8%, 27.1%, and 34.6% respectively [2][27] - Customer performance shows significant growth for clients other than the second-largest client, with notable increases for clients A, C, and D [2][30] - The company is expected to benefit from the recovery of Nike, which has been under pressure, as it continues to outperform its competitors [45][51] Regional Performance - Revenue growth by region shows double-digit increases in China, with the US and Japan also seeing improved sales proportions [2][36] - The company’s revenue from China grew by 13.2%, while sales in Europe saw single-digit growth [36] Future Outlook - The company plans a 10% increase in production capacity for 2025, with stable pricing and gross margins [51] - The management indicates that if Nike recovers, there could be further upside potential for the company’s orders and performance [53][54]