Summary of Key Points from Conference Call Records Industry Overview - The focus is on the lithium and cobalt sectors, with recent updates indicating a rebound in lithium carbonate prices due to optimistic market expectations for production resumption in September 2023. However, the transition from peak to off-peak season and the resumption of production may put pressure on prices. The current strong demand for energy storage is expected to keep lithium carbonate prices stable in the short term [1][3]. Core Insights and Arguments - **Lithium Market Dynamics**: - The anticipated resumption of a major lithium mine in Jiangxi is expected to positively influence market expectations, leading to a significant rebound in lithium carbonate prices to around 80,000 to 90,000 yuan per ton. However, as the market transitions to the off-peak season, prices may face downward pressure [3]. - The development of solid-state battery technology is highlighted, with estimates showing that 3GWh of solid-state batteries could require 2.5 to 3 times more lithium compared to traditional batteries. This could lead to a substantial increase in demand for lithium if solid-state technology is adopted more widely [3]. - **Cobalt Supply and Demand**: - China's cobalt raw material imports from the Democratic Republic of Congo (DRC) have seen a significant decline, with July imports down over 70% year-on-year. Domestic cobalt inventory is tight, estimated at 42,000 to 43,000 tons, while annual demand is around 50,000 tons, indicating a supply shortage [4]. - The upcoming expiration of the DRC's export ban is a point of concern. Even if exports are allowed, the market is expected to remain tight, with limited quota releases to ensure cobalt prices recover [4][5]. - **Future Cobalt Price Trends**: - The transportation and supply recovery timeline from the DRC to domestic production is approximately 3 to 4 months, meaning that any potential export resumption will have a limited immediate impact on domestic supply. Downstream replenishment is expected to continue until the end of the year or early next year [5]. - The demand for cobalt in sectors like consumer electronics and new energy vehicles is relatively price-insensitive, with current prices around 270,000 yuan per ton being acceptable. This suggests that there is significant upward price potential for cobalt [5]. Additional Important Insights - Companies to watch include those with nickel-cobalt production capacity in Indonesia, such as Huayou Cobalt, Liqin Resources, and Greeenmei, as well as those with resources and production capacity in the DRC, like Luoyang Molybdenum, Pengyuan Cobalt, and Hanrui Cobalt, which are expected to benefit from high quotas and prices [2][6].

Core Viewpoint - Dongwei Securities report indicates that Zhongwei Co., Ltd. experienced a decline in net profit attributable to shareholders in H1 2025, amounting to 730 million yuan, a decrease of 15.2% year-on-year [1] Group 1: Financial Performance - In Q2 2025, the net profit attributable to shareholders was 430 million yuan, reflecting a quarter-on-quarter decline of 12% and a year-on-year decline of 38% [1] - The company's output of nickel, cobalt, phosphorus, and sodium products reached 188,000 tons in H1 2025, representing a year-on-year increase of 34% [1] - The expected output for ternary precursors and four-cobalt products for the full year is around 230,000 tons, indicating a year-on-year growth of 15% [1] Group 2: Profitability and Market Position - The company is projected to achieve a profit contribution of 1.3 to 1.4 billion yuan from a single-ton profit of 6,000 yuan per ton [1] - In Q2, nickel prices further declined, while the cost of fire-smelting ore increased, leading to a forecast of marginal profits from metal nickel, with an expected contribution of 200 to 300 million yuan for the year [1] - As the largest precursor manufacturer in China, the company is expected to maintain a rising self-supply rate of nickel, with a target price of 46 yuan based on a 25x PE ratio for 2025, maintaining a "buy" rating [1]

Investment Highlights - Company reported a 38% quarter-on-quarter increase in net profit attributable to shareholders for Q2, aligning with expectations [1] - For the first half of 2025, the company achieved revenue of 21.32 billion yuan, a year-on-year increase of 6.2%, with a net profit of 730 million yuan, down 15.2% year-on-year [1] - The gross profit margin for the first half of 2025 was 12.1%, a decrease of 0.7 percentage points year-on-year [1] Product Performance - The company benefited from rising cobalt prices, with significant profit contributions from its four-cobalt products [2] - In the first half of 2025, the company shipped 188,000 tons of nickel, cobalt, phosphorus, and sodium products, a year-on-year increase of 34% [2] - The expected total shipment for Q2 of ternary precursors and four-cobalt products is 60,000 tons, a quarter-on-quarter increase of 30% [2] Financial Metrics - The company’s cash flow showed strong performance, with operating cash flow of 1.48 billion yuan in the first half of 2025, up 13.1% year-on-year [3] - Capital expenditures decreased by 28% in the first half of 2025, with Q2 capital expenditures down 55% quarter-on-quarter [3] - The company ended the first half of 2025 with inventory valued at 10.23 billion yuan, an increase of 4.1% from the beginning of the year [3] Profit Forecast and Valuation - The company revised its profit forecast for 2025-2027, now expecting net profits of 1.72 billion yuan, 2.02 billion yuan, and 2.7 billion yuan respectively, with year-on-year growth rates of 17%, 18%, and 33% [4] - The target price for the stock has been raised to 46 yuan, maintaining a "buy" rating based on a 25x PE for 2025 [4] - The company is recognized as the largest precursor manufacturer in China, with an increasing self-supply rate of nickel [4] Analyst Ratings - In the last 90 days, four institutions have issued ratings for the stock, all recommending a "buy" [8]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's Q2 net profit increased by 38% quarter-on-quarter, aligning with expectations. For the first half of 2025, revenue reached 21.32 billion yuan, a year-on-year increase of 6.2%, while net profit was 730 million yuan, a year-on-year decrease of 15.2% [7] - The company benefited from rising cobalt prices, with four-cobalt contributing to profit elasticity. The total shipment volume of nickel, cobalt, phosphorus, and sodium products in the first half of 2025 was 188,000 tons, a year-on-year increase of 34% [7] - The company is expected to maintain stable profitability in the three-element precursor segment, with a projected total shipment volume of around 230,000 tons for the year, representing a year-on-year increase of 15% [7] - The company has shown strong cash flow, with operating cash flow for the first half of 2025 reaching 1.48 billion yuan, a year-on-year increase of 13.1% [7] - The profit forecast for 2025-2027 has been adjusted downwards, with expected net profits of 1.72 billion, 2.02 billion, and 2.7 billion yuan respectively, reflecting a year-on-year growth of 17%, 18%, and 33% [7] Financial Summary - Total revenue for 2023 is projected at 34.273 billion yuan, with a year-on-year growth of 12.95%. By 2027, revenue is expected to reach 68.083 billion yuan, with a growth rate of 17.89% [1][8] - The net profit attributable to the parent company for 2023 is estimated at 1.947 billion yuan, with a year-on-year increase of 26.15%. By 2027, this is expected to rise to 2.696 billion yuan, reflecting a growth of 33.15% [1][8] - The latest diluted EPS for 2023 is projected at 2.08 yuan per share, with an expected increase to 2.87 yuan per share by 2027 [1][8] - The company’s P/E ratio is expected to be 19x in 2025, decreasing to 12.16x by 2027 [1][8]