Investment Rating - The investment rating for the non-ferrous metals industry is "Positive" (maintained) [4] Core Views - The report highlights the impact of the recent 232 tariffs on copper, which do not include refined copper, leading to a significant drop in US copper prices. The week saw a decline in copper prices with LME copper down 2.51%, SHFE copper down 1.07%, and US copper down 23.45% [5][10]. - The report emphasizes the recovery in downstream copper demand, with the copper rod operating rate increasing by 2.36 percentage points to 71.73% [5]. - The report suggests monitoring the supply disruptions in Chile and the potential impact of the Federal Reserve's interest rate cuts in September [5]. Summary by Sections 1. Industry Overview - Important macroeconomic information includes lower-than-expected job vacancies in the US and mixed employment data, indicating a cautious economic outlook [9]. - The non-ferrous metals sector underperformed, with the Shenwan non-ferrous index down 4.62%, lagging behind the Shanghai Composite Index by 3.68 percentage points [12]. 2. Industrial Metals Copper - LME copper prices fell by 2.51%, while SHFE copper prices decreased by 1.07%. LME copper inventory increased by 10.33% [26]. - The report notes a copper smelting profit of -2408 CNY/ton, indicating a narrowing loss [26]. Aluminum - LME aluminum prices dropped by 4.12%, and SHFE aluminum prices fell by 1.33%. The report indicates a decrease in aluminum smelting profit to 4116 CNY/ton, down 7.71% [37]. Lead and Zinc - LME lead prices decreased by 3.30%, and SHFE lead prices fell by 1.48%. LME zinc prices dropped by 4.59%, while SHFE zinc prices decreased by 2.19% [52]. - The report highlights a smelting profit of 346 CNY/ton for zinc, with mining profits down 6.47% to 6884 CNY/ton [52]. Tin and Nickel - LME tin prices fell by 5.10%, and SHFE tin prices decreased by 2.47%. LME nickel prices dropped by 4.08%, while SHFE nickel prices fell by 2.83% [66]. 3. Energy Metals Lithium - Lithium carbonate prices decreased by 2.13% to 71350 CNY/ton, while lithium hydroxide prices increased by 4.04% to 65670 CNY/ton [83]. - The report indicates a smelting profit of 862 CNY/ton for lithium from spodumene, while the profit from lithium from lepidolite was -4608 CNY/ton [83]. Cobalt - Domestic cobalt prices surged by 11.29% to 276000 CNY/ton, with significant increases in cobalt smelting profits [96]. 4. Market Performance - The report provides a detailed analysis of the performance of various non-ferrous metal stocks, highlighting the top gainers and losers in the market [12]. 5. Valuation Changes - The report notes that the PE_TTM for the non-ferrous sector is 20.54, with a decrease of 0.88, while the PB_LF is 2.37, down 0.11 [21].

Summary of Cobalt Industry Conference Call Industry Overview - The conference focused on the cobalt industry, particularly the impact of the Democratic Republic of the Congo (DRC) extending its cobalt export ban for an additional three months starting June 22, 2025, to manage high cobalt inventory levels in China [1][2]. Key Points and Arguments - **Cobalt Price Dynamics**: The initial export ban led to a nearly 100% increase in cobalt raw material prices, rising from $5.6 per pound to over $12 per pound, while metal cobalt prices increased approximately 50%, from $10 to $15.2 per pound [2]. - **Impact on Chinese Companies**: Despite an increase in cobalt raw material imports in the four months prior to the ban, Chinese companies are expected to face raw material shortages post-July, potentially leading to production halts in small to medium enterprises and reduced capacity in larger firms [1][2]. - **Future Price Trends**: Cobalt prices are anticipated to experience two phases: short-term fluctuations due to DRC policies and potential price increases from late July to mid-August due to insufficient raw material inventories [4]. - **Supply and Demand Outlook**: Current supply growth outpaces demand growth, indicating that the fundamental supply-demand balance will not change significantly in the short term [4][5]. - **Inventory Levels**: The industry currently holds approximately 70,000 to 80,000 tons of inventory, with about 50% allocated to raw materials. If prices on the Wuxi electronic market rise to 240,000-250,000 RMB, profit-taking may occur, impacting project timelines [7][8]. Additional Important Insights - **Cobalt Export Quota**: The DRC's monthly export quota of 10,000 tons is deemed insufficient for maintaining supply-demand balance, with recommendations to increase it to 12,000-13,000 tons or supplement with Indonesian MHP [2][13]. - **Downstream Impact**: Rising prices of ternary materials will negatively affect downstream industries, particularly in low-nickel production, limiting growth potential in lower-end vehicle applications [12]. - **Future Production from Indonesia**: Indonesia's MHP production is projected to exceed 40,000 tons in 2025 and could reach 80,000-90,000 tons by 2027, which may help alleviate supply constraints [15]. - **Electric Vehicle Battery Costs**: The rising costs of cobalt resources may lead to increased production costs for electric vehicles, particularly affecting the adoption of ternary lithium batteries in mid to high-end vehicles [10][22]. Conclusion - The DRC's extended export ban on cobalt is a significant factor influencing the cobalt market, with potential implications for pricing, supply chain dynamics, and production capacities in China and beyond. The industry must navigate these challenges while adapting to changing market conditions and inventory levels.

Core Viewpoint - The company reported strong Q1 2025 results with a significant increase in net profit, driven by growth in the copper and cobalt segments despite a decline in revenue and sales volume [1][2]. Financial Performance - In Q1 2025, the company achieved revenue of 46.006 billion yuan, a year-on-year decrease of 0.25% and a quarter-on-quarter decrease of 21.05% [1]. - The net profit attributable to shareholders was 3.946 billion yuan, a year-on-year increase of 90.47% but a quarter-on-quarter decrease of 24.97% [1]. - The non-recurring net profit was 3.928 billion yuan, reflecting a year-on-year growth of 87.82% and a quarter-on-quarter decrease of 13.99% [1]. Segment Performance - The increase in net profit by 1.874 billion yuan year-on-year was primarily due to a gross profit increase of 4.376 billion yuan, attributed to the copper and cobalt segments [2]. - In Q1 2025, the prices for cathode copper and metallic cobalt were 9,352 USD/ton and 11.9 USD/pound, showing year-on-year changes of +10.8% and -11.9%, respectively [2]. - The production of copper and cobalt in Q1 2025 was 170,600 tons and 30,400 tons, representing year-on-year increases of 15.6% and 20.7% [2]. - Despite significant year-on-year production growth, the sales volume of copper and cobalt decreased quarter-on-quarter by 43.4% and 16.7% to 124,000 tons and 24,000 tons, respectively [2]. Strategic Developments - The company plans to acquire 100% of Lumina Gold for 581 million CAD, which includes the Cangrejos gold project in Ecuador with substantial resources [3]. - The Cangrejos project has a resource estimate of 1.376 billion tons with an average gold grade of 0.46 g/t, containing 638 tons of gold [3]. - The project is expected to have a lifespan of 26 years and will be developed in three phases, with an initial capacity of 30,000 tons per day [3]. - The company aims to achieve annual production targets of 800,000 to 1,000,000 tons of copper, 90,000 to 100,000 tons of cobalt, and over 10,000 tons of niobium by 2028 [3]. Investment Outlook - The company forecasts net profits of 14.975 billion, 17.521 billion, and 20.035 billion yuan for 2025-2027, with corresponding EPS of 0.70, 0.81, and 0.93 yuan [4]. - The projected PE ratios based on the latest stock price are 10X, 9X, and 8X for the respective years [4].