Investment Rating - The industry rating is "Recommended" [4] Core Views - The report highlights that the import volume of tin from Myanmar has remained below the warning line of 10,000 tons for several months, leading to expectations of tight supply which may support tin prices [10][21] - Nickel prices have increased week-on-week, driven by traders' replenishment needs, with LME nickel spot settlement price reported at $15,120 per ton, up 0.6% from June 27 [21] - Cobalt prices have also risen, with electrolytic cobalt priced at 251,800 yuan per ton, up 0.6% from June 27, although downstream demand has not shown significant improvement [25][32] - The report notes a decrease in antimony ingot prices and production, with domestic antimony ingot average price at 192,500 yuan per ton, down 2.53% from June 26 [33][36] - Lithium carbonate prices have increased slightly, with the average market price at 62,300 yuan per ton, up 1.81% from June 27, but the market is expected to maintain a low-level fluctuation pattern [41][46] Summary by Sections Nickel Industry - Nickel prices have risen due to replenishment demand from traders, with LME nickel total inventory decreasing by 0.89% [21] - Domestic production costs for nickel smelters have increased significantly due to high CIF prices of Philippine nickel ore [21] - The report indicates that the suspension of production lines by Qingshan Holding Group may further impact local nickel mining in Indonesia [13][24] Cobalt Industry - Cobalt prices have increased, supported by the extension of a temporary export ban by the Democratic Republic of Congo, which accounts for about 75% of global electric vehicle battery supply [25][32] - Despite the price increase, downstream demand remains weak, with most manufacturers maintaining a just-in-time purchasing strategy [25][32] Antimony Industry - Antimony ingot prices have decreased, with a significant drop in production expected in July due to ongoing supply tightness [33][36] - The report suggests that domestic raw material supply remains tight, which may support future antimony prices [36] Lithium Industry - Lithium carbonate prices have seen a slight increase, but the market is still characterized by oversupply, with inventory pressures not effectively alleviated [41][46] - The report anticipates that lithium prices will continue to fluctuate at low levels due to ongoing supply-demand imbalances [41][46] Tin Industry - The report indicates that the import volume of tin from Myanmar is below the warning line, leading to expectations of tight supply which may support tin prices [10][21] - The overall supply situation is expected to remain tight due to slow recovery in Myanmar's tin mining operations [10][16] Rare Earth Industry - Following the recent US-China trade negotiations, China has partially relaxed its export controls on rare earths, which may alleviate some supply pressures for Western companies [15][19] - The report notes that the rare earth market is experiencing price increases driven by demand from major manufacturers, although actual transaction volumes remain low [9][15]

Market Overview - On June 11, the tungsten sector showed strength, with Xianglu Tungsten Industry hitting the limit up, and other companies like Xiamen Tungsten, Zhangyuan Tungsten, and China Tungsten High-tech also experiencing collective gains [1] Company Insights - Xianglu Tungsten Industry (002842.SZ) has turned profitable, operating in the complete tungsten industry chain, including mining, smelting, and production of various tungsten products, with a significant mining area of 5.96 square kilometers [2] - Guangdong Guangsheng Nonferrous Metals (600259.SS) has also turned profitable, focusing on a diversified industrial layout of rare earths, tungsten, and copper, with a tungsten resource reserve of 65,000 tons [2] - Xiamen Tungsten (600549.SS) is one of the largest tungsten smelting product processing companies globally, with a complete tungsten industry chain and significant market share in tungsten wire production [2] - Zhangyuan Tungsten (002378.SZ) is a leading tungsten smelting product processing company, with a complete production system from mining to deep processing and tungsten resource reserves of 94,600 tons [2] - Luoyang Copper (603993.SS) is a global leader in copper, cobalt, aluminum, and tungsten production, with a tungsten resource reserve of 26,040,000 tons [2] Price Trends - As of June 6, the price of 65% WO3 tungsten concentrate in China surpassed 173,000 yuan per ton, marking an increase of 31,000 yuan since the beginning of the year, with a cumulative rise of 21.8%, reaching a historical high [3] Institutional Analysis - China will implement export controls on tungsten-related matters by February 2025, which is expected to strengthen the strategic nature of tungsten resources, as 90% of tungsten concentrate processing capacity is concentrated in China [4] - The application of tungsten in various fields, including photovoltaic cutting and robotics, is expected to drive demand growth [5] - Supply constraints are anticipated due to declining production from existing mines and limited new mine launches, with the first batch of tungsten mining quotas for this year down 6.5% year-on-year, contributing to rising tungsten prices [5] - The tungsten market is expected to enter a bull market phase, with prices likely to continue breaking historical highs, and the supply-demand gap projected to expand from 18,300 tons in 2024 to 19,100 tons in 2028 [5]

Group 1: Tungsten Price Trends and Company Performance - Tungsten prices have reached a historical high of 165,000 RMB/ton, supported by a tight supply-demand balance due to factors like mining quotas and environmental regulations [2][3] - The company's performance benefits from high tungsten prices, as it owns quality mining assets and has a strong position in the hard alloy sector, which is innovating and optimizing product structures [3] - The company has adjusted prices for some cutting tools by 5-8%, affecting over 50% of total sales, to balance costs and market conditions [3] Group 2: Asset Injection and Future Plans - The company is actively planning the acquisition of four additional mining assets to enhance quality and profitability, with a commitment from the controlling shareholder to complete this within five years [3] - The injection of these assets will be gradual, considering the varying conditions and resource endowments of each mining enterprise [3] Group 3: PCB Micro Drill Production and Financial Performance - Jinzhou Company’s PCB micro drill production capacity is 480 million units in 2023, with an additional 200 million units expected in 2024, bringing total capacity to 680 million units [5] - The average selling price of PCB micro drills is projected to decline by approximately 7% to 1.56 RMB/unit in 2024, with a slight increase to 1.5 RMB/unit in Q1 2025 [5] - Despite price declines, Jinzhou Company has improved operational efficiency, maintaining a gross margin above 37% in 2024 and nearing 40% in Q1 2025, with a significant sales volume increase of over 50% year-on-year [5] Group 4: Product Structure and Market Position - Jinzhou Company’s "Three Treasures" (small diameter, long diameter, and coated micro drills) now account for over 50% of its product sales, reflecting a successful adaptation to market demands [6] - The company continues to lead in technological innovation, achieving breakthroughs in ultra-thin drill technology and expanding into high-end markets [7]

Core Viewpoint - The price of tungsten has reached historical highs due to supply-demand dynamics, with black tungsten concentrate prices rising by 18.2% from April to May 2023, and ammonium paratungstate (APT) prices increasing by 17% in the same period [1][2]. Supply Dynamics - The overall supply of tungsten raw materials is decreasing, primarily due to a reduction in mining quotas and declining ore grades in existing mines. The first batch of tungsten mining quotas for 2025 has been set at 58,000 tons, a decrease of 4,000 tons from the previous year [2][3]. - Major tungsten production regions in China, such as Jiangxi and Hunan, are experiencing quota reductions, with Jiangxi's quota down by 2,370 tons compared to the previous year [2]. - The tightening of mining regulations and the decline in ore grades from older mines are significant factors contributing to the reduced supply [3]. Demand Potential - There is potential for growth in tungsten demand across various sectors, including PCB cutting tools, low-altitude economy, and emerging technologies like controlled nuclear fusion and additive manufacturing [3][4]. - The rapid development of new energy vehicles is expected to drive demand for tungsten in specific applications, despite a potential short-term decline in demand from the steel metallurgy sector [4]. Industry Outlook - Industry experts maintain an optimistic outlook for the tungsten sector, anticipating continued price increases due to limited supply and rising production costs [5][6]. - The current price levels are seen as undervalued, with expectations for tungsten prices to stabilize around a new higher price center [6]. - The demand for tungsten in photovoltaic applications is also expected to grow, contributing to a positive long-term outlook for the tungsten industry [6].

Investment Rating - The industry investment rating is "Strong Outperform" [1] Core Viewpoints - Tungsten is a significant strategic resource, widely used in various industries, and its price has risen to 161,000 yuan/ton, the highest since 2013, due to supply tightening and supportive policies [2][19] - The global tungsten resource distribution is concentrated, with China holding 55% of reserves and 83% of production, and no new mines expected to come online in the next two years [2][29] - Demand for tungsten is expected to improve significantly due to large-scale equipment updates and supportive policies, particularly in the machinery and aerospace sectors [2][54] - Export controls implemented by China in February 2025 have strengthened the strategic nature of tungsten resources, with a projected global supply-demand gap of 5,433 tons by 2027 [2][19] Supply Summary - Domestic supply is tightening, with the first batch of tungsten mining indicators for 2025 reduced by 4,000 tons compared to 2024, leading to a 6.45% decrease in total mining quotas [33] - China's tungsten production is expected to decline due to the lack of new mining projects and decreasing ore grades, with the first batch of mining indicators for 2025 set at 58,000 tons [33][29] - The industry is experiencing consolidation, with larger companies dominating production as smaller firms exit the market due to regulatory pressures [33][29] Demand Summary - The demand for tungsten is closely linked to industrial development and macroeconomic conditions, with hard alloys being the primary application, accounting for 58.51% of tungsten consumption in 2024 [50] - The demand for tungsten materials is expected to rise, particularly in the photovoltaic sector, where tungsten wire is gaining traction due to its superior performance [62][66] - A large-scale equipment update initiative is expected to boost demand for tungsten, with significant investments planned across various sectors [54][57]

Summary of Tungsten Industry Conference Call Industry Overview - The tungsten industry is experiencing significant price fluctuations, with prices reaching 233,000 RMB/ton in May 2025, close to historical highs. The market may face short-term price adjustments due to profit-taking and price suppression sentiments, but the long-term outlook remains optimistic [2][3][23]. Key Points Market Dynamics - China's tungsten reserves account for 52% of global reserves, and its production represents 83% of the total global output. In 2024, tungsten concentrate production increased by 1.95% year-on-year, while APPEN production grew by 1.59%. Imports surged by 113%, primarily from North Korea, Myanmar, and Russia [2][5][7]. - The 2025 tungsten resource extraction quotas have been reduced, with some provinces not receiving allocations for the first time, indicating increased government control over resources. Limited overseas mining increases are expected, with a projected 0.5 million tons of metal from overseas mines this year [2][10][9]. Supply Chain and Consumption - The tungsten supply chain consists of upstream tungsten concentrate, midstream powders, and downstream tungsten products and hard alloys. Key consumption sectors include hard alloys, tungsten steel, tungsten materials, and tungsten chemicals [4]. - The global tungsten supply is composed of 65% from concentrates and 35% from recycled waste. China's recycling rate is approximately 20%, below the global average of 35% [2][13]. Geopolitical and Economic Factors - Increased geopolitical risks and heightened military spending are driving demand in advanced manufacturing and high-end applications, expanding the market for tungsten products. The mechanical industry is performing well, with growth in excavators, automobiles, and shipbuilding [18][19]. Price Trends and Expectations - Tungsten prices have seen rapid increases, with the highest price for APP reaching 245,000 RMB, an 18.93% increase from the lowest price earlier in the year. The market is expected to stabilize, with prices projected to range between 140,000 and 180,000 RMB per ton in 2025 [3][23][26]. - The acceptance of current tungsten prices by industry players is higher than in 2024, indicating a more stable market environment [26]. Export and Import Dynamics - Export control policies have limited the export volume of tungsten products, particularly raw materials, but have not significantly impacted domestic demand. The export volume of tungsten products has been declining, with a notable drop in 2024 [22][35]. - In 2024, approximately 12,429 tons of tungsten were imported, a 113% increase year-on-year, primarily from North Korea and Myanmar. The first quarter of 2025 saw a 50% increase in imports compared to the previous year [7][37]. Recycling and Environmental Standards - New industry standards set to be implemented in July 2025 are expected to regulate the import of recycled materials, potentially lowering production costs and promoting industry growth [15]. - China's recycling technology is still developing, with significant gaps compared to international standards, particularly in high-quality recycling processes [14][17]. Future Outlook - The tungsten market is expected to maintain a tight supply situation due to reduced extraction quotas and the depletion of existing mines. The overall supply-demand balance is relatively stable, with no significant imbalances anticipated [21][30][31]. Additional Insights - The mechanical industry is projected to continue its growth trajectory, with significant increases in production across various sectors, including automotive and renewable energy [19][20]. - The acceptance of price increases by end-users indicates a shift in market dynamics, where higher prices are becoming the norm rather than the exception [27][29].

Core Viewpoint - The company, Zhangyuan Tungsten, is adjusting the prices of its hard-facing materials due to a significant increase in tungsten raw material costs, which has led to a substantial rise in production costs [1] Group 1 - The price adjustment for hard-facing materials will take effect from May 20, 2025 [1] - All products will be executed at the new prices starting from the adjustment date [1]

Investment Rating - The report maintains a "Recommended" rating for the tungsten industry, indicating a positive outlook for the sector [3]. Core Insights - The tungsten quota has been reduced, leading to a continuous increase in tungsten prices. The Ministry of Natural Resources has set the total mining quota for tungsten at 58,000 tons for 2025, a decrease of 4,000 tons or 6.45% compared to 2024. This reduction is particularly pronounced in traditional tungsten mining regions like Jiangxi, likely due to increased mining depth and declining ore grades. As a result, tungsten prices have remained high, with black tungsten concentrate prices reaching 154,000 yuan per ton, an increase of 8.45% since early April 2025, nearing historical highs [6][6][6]. - Export controls on tungsten have been upgraded, and the Bakuta tungsten mine has commenced production. On February 4, 2025, the Ministry of Commerce and the General Administration of Customs implemented export controls on various tungsten-related products to protect strategic resources. The Bakuta tungsten mine, which began production in November 2024, aims for a processing capacity of 3.3 million tons of tungsten ore, with an expected output of over 6,000 tons. However, short-term overseas production increases are unlikely to alleviate current supply tightness [6][6][6]. - Macro policies may drive PMI recovery, with consumption expected to rebound. Since March, many hard alloy companies have issued price increases, reflecting the pressure of rising raw material costs on downstream sectors, which has further fueled tungsten price momentum. The global military industry’s rapid expansion is significantly boosting tungsten demand, particularly in defense applications. The current industry situation is characterized by tight tungsten supply, low demand, and low inventory levels, suggesting that a demand recovery could lead to further price increases [6][6][6]. - Investment recommendations favor companies involved in self-produced tungsten mining, cutting tools, and the entire industry chain. Companies to watch include China Tungsten High-tech, Xiamen Tungsten, Zhangyuan Tungsten, Xianglu Tungsten, and Oke Yi [6][6][6].

Summary of Key Points from Conference Call Records Industry or Company Involved - **Tungsten Industry**: Focus on strategic minerals and the impact of export controls on tungsten - **Huaihe Energy**: Involvement in coal, electricity, and logistics sectors - **5G-A Technology**: Development and deployment of advanced 5G technology Core Points and Arguments Tungsten Industry 1. **Export Control Measures**: The government has initiated actions to combat the smuggling of strategic minerals, including tungsten, which is essential in various industries such as automotive and aerospace [3][1] 2. **Tungsten Characteristics**: Tungsten is recognized for its high melting point, hardness, density, and thermal conductivity, earning it the nickname "industrial teeth" [3][1] 3. **Global Tungsten Supply**: By 2024, global tungsten reserves are projected to reach 4.6 million metric tons, with China contributing over 80% of the world's tungsten production [7][1] 4. **Demand and Applications**: The demand for tungsten is expected to reach 142,000 metric tons in 2024, primarily for hard alloys and tungsten steel, with significant applications in automotive and defense sectors [7][1] 5. **Recycling and Supply Challenges**: China's tungsten recycling rate is only 17%, indicating a gap in recovery and quality compared to international standards, which may affect future supply [7][1] Huaihe Energy 1. **Asset Injection Impact**: The company plans to acquire a significant stake in Huaihe Energy Power Group, which is expected to enhance its operational capacity and increase net profit by 105% [8][1] 2. **Coal Supply and Production**: Huaihe Energy has a strong coal supply chain, with a high coverage rate for long-term contracts, which positions it competitively in the market [11][1] 3. **Future Growth Potential**: The company has additional coal and power assets that could further increase its operational scale, with potential for significant growth in the coming years [11][1] 5G-A Technology 1. **Performance Enhancements**: 5G-A technology is expected to increase upload and download speeds by tenfold, significantly improving connectivity and reducing latency [12][1] 2. **Global Deployment**: Testing networks for 5G-A have been established across 31 provinces in China, with plans for expansion into international markets [12][1] 3. **Investment in Infrastructure**: There is a notable increase in capital expenditure from operators for 5G-A, indicating a strong commitment to enhancing network capabilities [15][1] Other Important but Possibly Overlooked Content - **Market Trends**: The tungsten sector is experiencing a bullish trend due to government actions against smuggling and the strategic importance of tungsten in various applications [4][1] - **Stock Performance**: Several companies within the tungsten industry and those involved in 5G technology have seen significant stock price increases, reflecting positive market sentiment [9][1][13][1] - **Long-term Outlook**: The overall outlook for both the tungsten industry and 5G-A technology remains positive, with expectations of sustained demand and growth opportunities in the coming years [7][1][15][1]

Core Insights - The company achieved a revenue of 14.743 billion yuan in 2024, representing a year-on-year growth of 7.8% [1] - The acquisition of Hunan Shizhu Garden Nonferrous Metals Co., Ltd. significantly enhanced the company's performance, contributing 3.571 billion yuan in revenue and 705 million yuan in net profit in 2024 [2] - The overall gross margin for 2024 was 22.07%, an increase of 0.85 percentage points year-on-year, with specific product margins showing varied performance [2] - The company reported a net profit attributable to shareholders of 939 million yuan in 2024, a year-on-year increase of 17.47% [3] - The company’s asset-liability ratio decreased to 52.40% in 2024, down by 2.51 percentage points [4] Revenue Breakdown - Revenue from cutting tools and tools was 3.189 billion yuan, up 4.31% year-on-year, driven by market expansion [1] - Revenue from hard alloys was 3.356 billion yuan, down 2.19% year-on-year [1] - Revenue from refractory metals was 2.426 billion yuan, up 11.68% year-on-year [1] - Revenue from powder products was 4.573 billion yuan, up 32.22% year-on-year [1] Profitability Analysis - The gross margin for blade products was 33.30%, down 1.72 percentage points year-on-year [2] - The gross margin for alloy products was 18.63%, down 0.51 percentage points year-on-year [2] - The gross margin for refractory metals was 10.33%, down 2.68 percentage points year-on-year [2] - The gross margin for powder products was 23.61%, up 5.09 percentage points year-on-year [2] Expense and Cash Flow - The operating expense ratio for 2024 was 13.42%, an increase of 1.12 percentage points year-on-year [3] - The company’s cash flow from operations improved, with a net cash inflow of 900 million yuan, an increase of 750 million yuan year-on-year [3] - The investment cash flow was negative at -850 million yuan, reflecting increased spending on technological upgrades and land acquisition [3] Future Outlook - The company is expected to achieve net profits of 1.094 billion yuan, 1.323 billion yuan, and 1.476 billion yuan from 2025 to 2027 [4]