Core Viewpoint - The company has completed the investment projects funded by the public issuance of convertible bonds and will permanently supplement its working capital with the remaining funds, amounting to 265.96 million yuan [2][5]. Group 1: Fundraising Basic Situation - The fundraising project includes the production of high-nickel ternary cathode materials and nickel sulfate, among others, which have reached the expected usable state as of September 30, 2025 [2][4]. - The total remaining amount from the fundraising is 26,595.79 thousand yuan, which will be used for daily production and operations [2]. Group 2: Project Completion and Fund Surplus - The projects funded by the convertible bonds have been completed and are operational, meeting the conditions for project completion [2][4]. - The remaining funds will be used to enhance the efficiency of fund utilization and reduce financial costs, without adversely affecting the company's normal operations [3][5]. Group 3: Review Procedures and Opinions - The audit committee and board of directors have approved the project completion and the use of surplus funds, confirming compliance with regulatory requirements and protection of shareholder interests [3][4][5]. - The surplus funds account for 3.52% of the net amount raised from the convertible bond issuance, which does not exceed the 10% threshold, thus not requiring shareholder meeting approval [5].

Core Insights - The company reported Q3 2025 earnings that met expectations, with a revenue of 58.94 billion yuan for the first three quarters, a year-on-year increase of 29.6%, and a net profit of 4.216 billion yuan, up 39.6% year-on-year [1] - The nickel segment maintained stable production and overproduction to offset price declines, while rising cobalt prices contributed to profit growth [1] Financial Performance - For Q3 2025, the company achieved a revenue of 21.74 billion yuan, a year-on-year increase of 40.9% and a quarter-on-quarter increase of 12.3% - The net profit for Q3 2025 was 1.505 billion yuan, reflecting an 11.5% year-on-year increase and a 3.2% quarter-on-quarter increase [1] Industry Trends - The company is advancing key projects and strengthening its integrated industrial advantages, including new stakes in two laterite nickel mines and a 63% increase in lithium resources from the Arcadia lithium mine [2] - The tightening supply and demand dynamics are driving cobalt prices up, with the Democratic Republic of Congo's new export quotas expected to tighten the market further [2] - The commercial application of solid-state batteries is anticipated to boost demand for ternary batteries, with projections indicating a tight supply-demand situation in the cobalt industry from 2025 to 2027 [2] Profit Forecast and Valuation - Due to the significant rise in cobalt prices, the company's profit forecasts for 2025 and 2026 have been raised by 20.3% and 54.3%, respectively, to 5.92 billion yuan and 8.33 billion yuan [3] - The current stock price corresponds to a price-to-earnings ratio of 20.1 for 2025 and 14.3 for 2026, with a target price increase of 72.1% to 74.56 yuan, indicating a potential upside of 19.1% from the current stock price [3]

Core Viewpoint - The report highlights the strong performance of Huayou Cobalt in Q3 2025, driven by integrated operations and rising cobalt prices, indicating a positive outlook for the company's profitability and growth potential [4][5]. Financial Performance - For the first three quarters of 2025, Huayou Cobalt reported revenue of 58.94 billion yuan, a year-on-year increase of 29.6%, and a net profit attributable to shareholders of 4.22 billion yuan, up 39.6% year-on-year. The non-recurring net profit was 4.01 billion yuan, reflecting a 31.9% increase [4]. - In Q3 2025, revenue reached 21.74 billion yuan, marking a 40.9% year-on-year growth and a 12.4% quarter-on-quarter increase. The net profit attributable to shareholders was 1.505 billion yuan, up 11.5% year-on-year and 3.2% quarter-on-quarter [4]. Operational Highlights - The integrated operational advantages are evident, with nickel wet-process capacity gradually being released, leading to sustained overproduction. In the first half of 2025, MHP shipments reached approximately 120,000 tons, a year-on-year increase of over 40%, with expectations for continued overproduction in Q3 [5]. - Cobalt prices have shown significant recovery, with average prices in China for Q1, Q2, and Q3 of 2025 being 192,000 yuan/ton, 239,000 yuan/ton, and 267,000 yuan/ton respectively, primarily benefiting from the export ban on cobalt from the Democratic Republic of Congo [5]. Project Developments - The Pomalaa project, with an annual production capacity of 120,000 tons of nickel metal, has commenced construction, while the Sorowako project, with a capacity of 60,000 tons, is progressing well [6]. - A lithium sulfate project in Zimbabwe, expected to produce 50,000 tons annually, is in the equipment installation phase and is anticipated to be completed by the end of the year, which will further reduce lithium salt production costs [6]. - The first phase of the ternary precursor project in Indonesia, with a capacity of 50,000 tons, has achieved bulk supply, and the first phase of the cathode material project in Hungary, with a capacity of 25,000 tons, is expected to be completed within the year [6]. Market Outlook - The cobalt export quota system from the Democratic Republic of Congo, effective from October 16, 2025, allows for exports of 36,250 tons in Q4 2025 and a total of 96,600 tons from 2026 to 2027. This change is expected to support cobalt prices in the coming years [7]. - Based on the estimated cobalt production reduction of 141,600 tons during the export ban period, and assuming stable demand, the cobalt supply-demand balance for 2025-2027 is projected to be -75,000 tons, -33,000 tons, and -33,000 tons respectively, indicating a potential supply deficit [7].

Group 1 - The stock of Liqin Resources (02245) increased by over 8%, reaching 26.9 HKD, with a trading volume of 19.58 million HKD [1] - The Democratic Republic of Congo announced the lifting of the cobalt export ban on October 16, implementing annual export quota management, with a cap of 18,125 tons for the remainder of 2025 [1] - The DRC is the largest cobalt producer globally, accounting for 75.86% of the world's production in 2024 [1] Group 2 - Analysts predict that the DRC's export quota policy will lead to significantly lower global cobalt supply from 2025 to 2027, with shortages of 122,000 tons, 88,000 tons, and 97,000 tons respectively, potentially driving cobalt prices up [1] - Minsheng Securities noted that nickel prices are at a cyclical bottom with clear cost support, and the DRC's export ban has exacerbated domestic raw material shortages [2] - The company’s wet-process nickel production capacity is located in Indonesia, which is unaffected by the DRC's export restrictions, allowing it to benefit from rising cobalt prices [2]

Core Viewpoint - The lifting of the cobalt export ban in the Democratic Republic of Congo (DRC) is expected to significantly impact global cobalt supply and prices, with the country being the largest producer globally, accounting for 75.86% of the world's production in 2024 [1] Group 1: Cobalt Market Impact - The DRC will lift its cobalt export ban on October 16, implementing an annual export quota management system, with a cap of 18,125 tons for the remainder of 2025 [1] - The export quota policy is projected to lead to a global cobalt supply shortage from 2025 to 2027, with shortfalls of 122,000 tons, 88,000 tons, and 97,000 tons respectively [1] - Analysts anticipate that cobalt prices are likely to rise significantly due to the expected supply constraints [1] Group 2: Nickel Market Dynamics - Indonesia's newly released RKAB regulations for 2026 are expected to boost nickel ore demand, supporting nickel prices [1] - Minsheng Securities noted that nickel prices are currently at a cyclical low, with clear cost support [1] Group 3: Company Growth Potential - The company has wet nickel production capacity located in Indonesia, which is not affected by the DRC's export restrictions, allowing it to fully benefit from rising cobalt prices [1] - The combination of new capacity release and cost advantages indicates significant growth potential for the company [1]

Core Viewpoint - Tengyuan Cobalt Industry (301219.SZ) is currently experiencing a decline in stock price, with a closing price of 65.72 yuan and a drop of 3.35%, resulting in a total market capitalization of 19.369 billion yuan. The stock is in a state of breaking below its initial public offering price [1]. Group 1: IPO and Financial Performance - Tengyuan Cobalt Industry was listed on the Shenzhen Stock Exchange's ChiNext board on March 17, 2022, with an initial public offering (IPO) price of 173.98 yuan per share and a total of 31.4869 million shares issued [1][2]. - The total funds raised from the IPO amounted to 5.478 billion yuan, with a net amount of 5.204 billion yuan after deducting issuance costs. The net funds raised exceeded the original plan by 3.006 billion yuan [2]. - The company planned to use the raised funds for projects including the annual production of 20,000 tons of cobalt and 10,000 tons of nickel, as well as for working capital [2]. Group 2: Dividend Distribution - In 2021, Tengyuan Cobalt Industry announced a dividend distribution plan, proposing a cash dividend of 39.9 yuan per 10 shares and a capital reserve conversion of 8 shares for every 10 shares held [2]. - For the year 2022, the company announced a cash dividend of 12.00 yuan per 10 shares, totaling 272.046 million yuan, along with a capital reserve conversion of 3 shares for every 10 shares held, increasing the total share capital to 294,717,182 shares [3].

Group 1 - The company announced a change in the use of 588 million yuan of raised funds, reallocating it from a project to produce 120,000 tons of ternary precursor capacity to a new project for a copper and cobalt hydrometallurgical plant with a capacity of 30,000 tons of copper and 2,000 tons of cobalt [1] - The company plans to maintain its overall production capacity at 39,500 tons of cobalt, 60,000 tons of nickel, 21,800 tons of manganese, and 20,000 tons of lithium carbonate [1] - The new project will be implemented by the company's subsidiary, and the new location for the project is in the Lualaba Province of the Democratic Republic of the Congo [1] Group 2 - The company's revenue for the year 2024 is expected to be entirely from the non-ferrous metal industry, with a 100% share [2] - The current market capitalization of the company is 21.7 billion yuan [3]

Core Viewpoint - The company, Hanrui Cobalt, reported significant growth in its financial performance for the first half of 2025, with a notable increase in both revenue and net profit, indicating a recovery from previous downturns in the cobalt market [1] Financial Performance - In the first half of 2025, Hanrui Cobalt achieved an operating income of 3.168 billion yuan, representing a year-on-year growth of 23.77% [1] - The net profit for the same period was 127 million yuan, showing a substantial year-on-year increase of 102.94% [1] - The company's first quarter of 2025 saw a non-recurring net profit of 22.23 million yuan, a decline of 63.59% year-on-year, but it rebounded to 83.07 million yuan in the second quarter, demonstrating strong profit elasticity post-capacity ramp-up [1] Historical Performance - From 2023 to 2024, Hanrui Cobalt experienced a performance cycle from pressure to recovery, with a net profit of 138 million yuan in 2023, down over 34% year-on-year due to falling cobalt prices [1] - In 2024, the net profit recovered to 201 million yuan, driven by tightened supply from the extended cobalt export ban in the Democratic Republic of Congo and improved capacity utilization [1] Shareholder Activity - Significant shareholder reductions have been noted, with the controlling shareholders, Liang Jiankun and Liang Jie, having reduced their holdings since the lifting of the lock-up period in 2020, cashing out a total of 952 million yuan over three years [2][3] - In July 2025, other shareholders announced plans to reduce their holdings by up to 3% due to personal funding needs [3] Strategic Initiatives - The company provided a bank credit guarantee of up to 120 million USD for its wholly-owned subsidiary in Hong Kong, aimed at funding the construction of a nickel project in Indonesia, which is expected to generate annual revenue of 2.37 billion yuan and a gross margin of 29.2% upon its completion in March 2026 [3] - The nickel project is crucial for addressing the company's supply chain gaps in the "cobalt powder - precursor" segment and is projected to meet the demand for 400,000 electric vehicles [3] Challenges - Despite the recovery in performance, the company faces challenges, as evidenced by a decline in gross profit margin to 11.2% in the first quarter of 2025, down from 16.57% in the same period of 2024, highlighting the ongoing impact of price fluctuations in copper and cobalt on profitability [3] - The ongoing shareholder sell-offs and fluctuating gross margins reflect the vulnerabilities of resource-based companies amid cyclical market changes [3]

Investment Rating - The report maintains a "Buy" rating for the company [5][7]. Core Views - The company continues to demonstrate rapid growth in performance, with a significant increase in revenue and net profit for the first half of 2025, highlighting its cyclical growth attributes [1][5]. - The company is benefiting from strong production performance in its nickel projects, with substantial year-on-year increases in nickel product shipments and revenue [2][21]. - The integrated lithium battery materials layout is establishing a solid competitive advantage, positioning the company for sustained growth [60]. Summary by Sections Company Performance - In H1 2025, the company achieved revenue of approximately 372 billion yuan, a year-on-year increase of 23.78%, and a net profit attributable to shareholders of 27.11 billion yuan, up 62.26% year-on-year [1][12]. - In Q2 2025, revenue reached about 194 billion yuan, reflecting a year-on-year growth of 28.28% and a quarter-on-quarter increase of 8.48% [1][12]. Production and Sales - Nickel projects are consistently overproducing, with MHP output expected to reach 120,000 tons in H1 2025, a year-on-year increase of over 40% [2][56]. - Nickel product shipments totaled 139,400 tons in H1 2025, marking an 83.91% increase year-on-year [2][21]. - The company has adjusted its sales strategy for cobalt, leading to a 9.89% decline in cobalt product shipments [2][21]. Pricing Trends - The report notes a significant recovery in cobalt prices due to policy disruptions in the Democratic Republic of Congo, while nickel prices have slightly declined but are expected to stabilize [3][22]. - Key product prices in Q2 2025 included copper at 77,700 yuan/ton, cobalt at 15.80 USD/pound, and nickel at 15,348 USD/ton, with varying changes from the previous quarter [3][24]. Project Development - The company is advancing its project construction, including new nickel and lithium projects in Indonesia and Zimbabwe, which are expected to enhance resource reserves and production capacity [4][70]. - The Pomalaa and Sorowako wet process projects are under development, aiming to double the company's nickel production capacity [4][66]. Financial Forecast - The company forecasts net profits attributable to shareholders of 60.48 billion yuan, 70.96 billion yuan, and 83.36 billion yuan for 2025, 2026, and 2027, respectively, with corresponding PE ratios of 14X, 12X, and 10X [5][6].

Summary of the Conference Call on Huayou Cobalt Co., Ltd. Industry Overview - The cobalt price surge is primarily driven by the export ban and quota policy implemented by the Democratic Republic of the Congo (DRC) since February 22, 2025, with potential quotas expected after September 22, 2025. If quotas are set below 50% of production, supply tightness will intensify, further driving up cobalt prices [2][5][8]. - Market expectations indicate that cobalt prices could rise to 400,000 CNY per ton in 2025, as the DRC aims to recover from previous losses where prices fell to 150,000-160,000 CNY per ton [2][4]. Company Insights - Huayou Cobalt is positioned as the largest beneficiary of increased cobalt production from nickel by-products in Indonesia, with an estimated cobalt equity of 12,000 tons from nickel production [2][11]. - The company is enhancing profitability through cost reduction and efficiency improvements, with lithium sulfate cost reductions expected to contribute 500 million CNY to profits [2][13][14]. - Huayou Cobalt's nickel segment is set to double its production capacity, with the COMALA project expected to commence production by the end of next year and the Sorowako project anticipated to start in 2027-2028 [2][17]. Financial Performance - In the first half of the year, Huayou Cobalt achieved a profit of 2.7 billion CNY, with expectations for improved performance in the second half, leading to an overall profit of over 5 billion CNY for the year [10][12]. - The company's current market capitalization is over 70 billion CNY, with a price-to-earnings ratio of 13, indicating a reasonable valuation with significant upside potential as cobalt and nickel prices are at historical lows [4][12][15]. Market Dynamics - Recent customs data revealed a decrease in imported cobalt intermediate products, with July imports at approximately 14,000 tons, down from over 19,000 tons in June and nearly 50,000 tons in May, contributing to the overall increase in cobalt prices [3]. - The DRC's export ban has led to a tightening supply, with cobalt prices currently ranging between 250,000 and 260,000 CNY per ton, with expectations for a rapid price increase by late August to early September [5][6]. Future Outlook - The cobalt industry outlook remains positive, with expectations for a price surge towards the end of the year, potentially reaching 400,000 CNY per ton [6][10]. - Demand for power batteries and consumer electronics (3C) is expected to improve in the fourth quarter, although the extent of improvement may be limited [9]. - Huayou Cobalt's strategic focus on cost control and efficiency, alongside its growth in nickel production capacity, positions the company favorably for future profitability and stock price appreciation [14][15][17]. Additional Considerations - The DRC is likely to introduce supportive policies post-September 22, which could impact market dynamics significantly. If quotas are set too leniently, it may lead to a price drop, while stricter quotas could sustain or increase prices [8]. - The company is optimistic about the performance of its ternary materials, particularly in the cylindrical battery market, which is expected to see significant growth [14]. This comprehensive analysis highlights Huayou Cobalt's strategic positioning within the cobalt industry, its financial performance, and the broader market dynamics influencing future growth.