Macro Research - The core inflation and overall CPI have been diverging since the beginning of the year, driven by anti-involution governance, fiscal support, and rising gold prices, which are beneficial for the long-term recovery of core inflation [2][5] - In October, the CPI increased by 0.2% year-on-year and month-on-month, while the PPI decreased by 2.1% year-on-year but rebounded to 0.1% month-on-month, indicating a steady recovery in inflation [3][16] Overseas Strategy Research - The recent strengthening of the US dollar is primarily due to the US government shutdown causing liquidity issues, hawkish statements from the Federal Reserve, and weakness in non-US currencies [6][25] - Historically, a strong dollar has led to capital outflows from Hong Kong stocks, and under the currency peg system, it may temporarily affect local liquidity and sectors in Hong Kong [7][26] - Short-term focus should be on the reopening of the US government and economic data, while mid-term prospects for Hong Kong stocks are optimistic, particularly in the technology sector [8][27] Transportation Industry Research - The Chinese aviation sector is expected to enter a "super cycle" as supply and demand gradually recover, with a significant increase in profitability anticipated [9][10] - The supply side is constrained by airspace bottlenecks, leading to a low growth environment, while demand is expected to remain robust due to the ongoing aviation population dividend [11][10] - The recovery in demand will drive ticket prices higher, contributing to a sustainable increase in profitability for airlines [10][11]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported a revenue of 5.75 billion yuan for the first three quarters of 2025, representing an 18% year-on-year increase, and a net profit attributable to shareholders of 750 million yuan, up 22% year-on-year. In Q3 alone, revenue reached 2.22 billion yuan, a 32% year-on-year increase and a 7% quarter-on-quarter increase, with a net profit of 280 million yuan, marking a 48% year-on-year growth [4][5] - The company is expected to achieve net profits of 1.014 billion yuan, 1.373 billion yuan, and 1.672 billion yuan for 2025, 2026, and 2027 respectively, with corresponding P/E ratios of 20, 15, and 12 [5] - The company is advancing its integrated layout, with the Democratic Republic of the Congo's quota policy expected to support rising cobalt prices. The company has established processing capabilities for cobalt salts, electrolytic cobalt, and electrolytic copper, and is extending its reach into downstream markets [8] Financial Summary - For 2025, the company is projected to have a revenue of 7.661 billion yuan, a year-on-year growth of 17.1%, and a net profit of 1.014 billion yuan, reflecting a 47.9% increase year-on-year. The gross margin is expected to be 25.8% [7] - The company’s return on equity (ROE) is projected to increase from 7.8% in 2024 to 10.3% in 2025, and further to 12.2% in 2026 [7] - The earnings per share (EPS) is expected to rise from 2.33 yuan in 2024 to 3.44 yuan in 2025, and reach 4.66 yuan in 2026 [7]

Core Viewpoint - The report from Guotai Junan maintains an "overweight" rating for the lithium and cobalt industry, indicating a strong demand that supports lithium prices, while cobalt prices are expected to show upward momentum until the end of the year [1][2]. Lithium Sector - The lithium market is experiencing strong demand, leading to price increases. The weekly price for battery-grade lithium carbonate rose by 2.79% to a range of 74,500-76,330 CNY/ton [1][3]. - The lithium concentrate price reached 881 USD/ton, an increase of 35 USD/ton, reflecting strong overseas pricing sentiment and robust downstream purchasing intentions [2]. - The production of lithium salts remains high, with a weekly production increase of 2.43% and a decrease in inventory by 1.73%, indicating a significant improvement in supply-demand dynamics [3]. Cobalt Sector - Cobalt prices are experiencing fluctuations due to weak downstream demand and inventory pressures. The average price for electrolytic cobalt increased by 6.96% to a range of 400,000-415,000 CNY/ton [4]. - Cobalt salt prices are stabilizing as downstream demand focuses on inventory digestion and essential replenishment, with limited acceptance of current prices [4]. - Cobalt companies are extending their operations towards new energy sectors, creating a cost advantage through integrated production processes [2]. Market Dynamics - The demand for new energy vehicles continues to grow, with retail sales of 632,000 units in October, a year-on-year increase of 5% and a penetration rate of 56.1% [3]. - The supply side is seeing new production lines coming online, but the pressure from increased production capacity remains a concern for future price stability [3].

Core Viewpoint - The lithium battery downstream demand remains strong, driving prices higher due to inventory depletion, while cobalt products continue to rise but with slower downstream follow-up, indicating a potential slowdown in price increases [1][2]. Lithium Sector - The lithium sector is experiencing a peak demand season, with inventory depletion pushing prices up. The weekly price of lithium carbonate in Wuxi rose by 1.32% to 76,500 CNY/ton, while the price in the Shanghai Futures Exchange increased by 4.25% to 78,900 CNY/ton [1]. - Lithium concentrate prices reached 881 USD/ton, an increase of 35 USD/ton compared to the previous period, reflecting strong demand from downstream buyers [1][2]. - The production of battery-grade lithium carbonate averaged between 74,500 and 76,330 CNY/ton, with a weekly increase of 2.79% [2]. Cobalt Sector - Cobalt prices are experiencing upward pressure, but the actual demand from the downstream is limited, leading to a slower price increase. The average price of electrolytic cobalt rose by 6.96% to between 400,000 and 415,000 CNY/ton [3]. - Cobalt salt prices are stabilizing as downstream acceptance of current prices is low, focusing mainly on inventory digestion and essential replenishment [3]. - The integration of cobalt-nickel precursor production enhances competitive barriers for cobalt companies, as they extend their reach into the new energy sector [1][3]. Market Dynamics - The overall market is witnessing a strong demand for lithium, supported by the rapid growth of power batteries and a thriving energy storage market, with the operating rate of downstream manufacturers continuously increasing [2]. - Despite the strong demand, the supply side is also seeing new production lines coming online, which may exert pressure on prices in the latter part of November [2].

Investment Rating - Maintain "Buy" rating for the sector [5] Core Views - The report indicates that the precious metals market is expected to maintain a bullish trend in the medium to long term due to inflationary pressures and global liquidity easing, despite recent price corrections [1][34] - For industrial metals, copper prices are supported by tight supply conditions and liquidity easing, while aluminum prices are expected to show strong fluctuations due to overseas production cuts and geopolitical tensions [2][3] - Energy metals, particularly lithium, are projected to see strong price performance driven by positive demand expectations, while cobalt prices are also on an upward trend despite cautious purchasing strategies from downstream buyers [3][25] Summary by Sections Precious Metals - U.S. September CPI recorded at 3%, lower than the expected 3.1%, indicating a potential for interest rate cuts by the Federal Reserve [1][34] - The consumer confidence index in the U.S. has declined to 53.6, reflecting weak economic fundamentals [1][34] - The report suggests that the recent pullback in gold prices is considered sufficient, and long-term bullish trends remain intact [1][34] Industrial Metals - Copper prices are supported by tight supply due to disruptions in mining and easing liquidity conditions [2] - Global copper inventory increased by 19,400 tons, with Chinese inventory rising by 17,100 tons [2] - The report highlights that the aluminum industry in China is maintaining production levels, while overseas production cuts are expected to support aluminum prices [2] - Nickel demand remains strong, particularly in the battery sector, with prices expected to rise [2] Energy Metals - Lithium prices are showing strong performance, with battery-grade lithium carbonate prices rising by 5.4% to 80,000 yuan/ton [3][25] - Cobalt prices are also on the rise, supported by strong demand from the ternary material sector, although purchasing strategies are becoming more cautious [3][25] Key Stocks - Recommended stocks include: - Zijin Mining, Shandong Gold, and Chifeng Jilong Gold for precious metals [1] - Luoyang Molybdenum, Nanshan Aluminum, and China Hongqiao for industrial metals [2][8] - Ganfeng Lithium and Tianqi Lithium for energy metals [3][8]

Core Viewpoint - The article highlights the recovery of the lithium battery mineral resource industry, with Huayou Cobalt's performance indicating a positive trend in the sector, driven by both market demand and strategic resource positioning [2][3]. Industry Overview - In Q3 2025, Huayou Cobalt reported a revenue of 58.941 billion yuan and a net profit of 4.216 billion yuan, marking year-on-year increases of 29.57% and 39.59% respectively, signaling a recovery in the lithium battery mineral resource sector [2]. - The company signed a long-term contract with LG Energy for 164,000 tons of ternary materials over five years, reflecting the growing importance of lithium battery mineral resources in the supply chain [5]. Resource Supply Dynamics - The global cobalt supply has been disrupted by export bans from the Democratic Republic of Congo, leading to a spike in domestic cobalt prices, which reached 390,000 yuan per ton [3]. - Huayou Cobalt's integrated model of "overseas resource development - local smelting - downstream material manufacturing" is becoming a common strategy among leading companies to mitigate price risks and enhance market position [3][10]. Market Demand Trends - The demand for ternary materials is recovering, with shipments increasing by over 20% year-on-year to 580,000 tons in the first three quarters of 2025, driven by expanding end-user applications [7]. - Emerging sectors such as AI robotics and low-altitude aircraft are increasing the demand for cobalt and nickel resources, alongside the acceleration of solid-state battery commercialization [4]. Strategic Resource Positioning - Companies are increasingly favoring regional resource layouts, establishing production bases in mineral-rich areas like Indonesia and Africa to reduce costs and comply with international trade regulations [8]. - Huayou Cobalt's investment in Hungary for cathode material production exemplifies the integration of mineral processing with downstream applications to meet European battery market demands [9]. Profitability Shifts - Industry profits are gradually shifting towards companies with integrated resource capabilities, as lithium prices stabilize and the profit margins in upstream lithium resources diminish [10]. - The overall recovery in the lithium battery mineral resource sector is reflected in the performance of multiple domestic nickel and cobalt resource developers [11]. Future Outlook - The strategic value of cobalt and nickel resources is expected to rise further with the acceleration of solid-state battery development and the expansion of resource demands in emerging fields [11]. - The competition for mineral resources is likely to drive the industry towards more intensive resource utilization, global layouts, and deeper collaborations, marking the beginning of a new cycle in the lithium battery mineral resource sector [12].

Summary of Cobalt Market Conference Call Industry Overview - The conference call discusses the cobalt industry, specifically focusing on the new export policies implemented by the Democratic Republic of the Congo (DRC) regarding cobalt mining and exportation [1][2][3]. Key Points and Arguments New Export Policies - The DRC has introduced a quota system for cobalt exports, which allows limited exports but is unlikely to alleviate the domestic supply tightness in the short term [1]. - From September to December, there will be an import gap, necessitating the consumption of existing inventory [1]. - The new policy significantly impacts small to medium-sized cobalt smelting companies, particularly those lacking the technology for producing cobalt sulfate or chloride [1][5]. Supply and Demand Dynamics - The DRC's quota policy will lead to continuous consumption of domestic cobalt inventory, making it difficult to balance supply and demand in the short term [1][6]. - The expected cobalt export volume for 2025 is 18,200 tons, which, combined with previous imports, totals approximately 103,000 tons, still insufficient to meet demand [4]. - Monthly consumption in China is between 13,000 to 14,000 tons, indicating a persistent supply gap [4]. Market Price Impact - The quota policy's effect on market prices is limited, with expectations that cobalt prices will stabilize around 300,000 yuan per ton due to rising raw material costs [12]. - The market is anticipated to transition from a fast bull market to a slow bull market, with a bullish trend expected to last for one to two years [8][17]. ESG Compliance and International Supply Chain - The international supply chain is adjusting to higher ESG compliance requirements, including a ban on child labor, which may increase battery costs for large mining companies if they are acquired by foreign firms [10][11]. - The DRC aims to establish a closed-loop cobalt industry chain, but current developments are limited [11]. Future Market Predictions - The cobalt market is expected to face a tight supply situation, with potential shortages projected for 2026 [16][18]. - The domestic visible inventory of cobalt is approximately 80,000 to 90,000 tons, with a monthly consumption rate that could reach up to 170,000 tons when considering exports [16]. Additional Important Insights - The quota distribution process may be susceptible to corruption, as the governing body has significant power over allocation [7]. - Pure smelting companies face challenges in obtaining cobalt mining quotas, as the regulations primarily target mining operations [13][15]. - The development of alternative materials, particularly lithium iron phosphate, is gaining traction, although high stock prices may hinder innovation in battery technology [9]. This summary encapsulates the critical insights from the conference call regarding the cobalt market, highlighting the implications of new policies, supply-demand dynamics, pricing trends, and future market outlooks.

Group 1 - The Democratic Republic of the Congo (DRC) is considering extending its cobalt export ban, which could benefit companies with cobalt mining capacities in Indonesia, as DRC holds a dominant position in global cobalt resource supply [1] - The DRC has allowed the export of cobalt salts that have been smelted and refined locally, benefiting a domestic company engaged in cobalt smelting cooperation and holding cobalt salt export quotas [1] - The Indonesian government has shut down some nickel smelting facilities under the guise of environmental reviews, leading to a clear upward trend in nickel prices; a specific company relying on its hydrometallurgical nickel capacity could significantly increase related business profits [1]

Core Viewpoint - Cobalt raw material prices are on the rise, with smelters purchasing only as needed due to high prices of cobalt intermediates, leading some companies to switch to cobalt salts, which are currently in tight supply [1] Group 1: Market Dynamics - The Congolese government has extended the export ban on cobalt for three months starting from June 22, significantly impacting the market supply [1] - In July, China imported 13,800 tons of cobalt wet-process intermediate products, with expectations of a continued decline in subsequent months, further reducing smelters' raw material inventories [1] - The impending expiration of the three-month extension of the Congolese ban may lead to policy adjustments, including potential extensions or export quotas, reinforcing supply issues [1] Group 2: Demand and Pricing Outlook - The demand remains relatively strong during the consumption peak season, while supply tightness is expected to keep prices robust [1]

Group 1: Industrial Metals - The expectation of a Federal Reserve interest rate cut has increased, combined with the seasonal demand in September and October, leading to strong upward momentum in industrial metal prices [1][2] - Copper prices are supported by a decrease in electrolytic copper production expected in October, with the SMM import copper concentrate index reporting a weekly increase of $0.63 to -$40.85 per ton [2] - Aluminum production has slightly increased to 847,300 tons, with domestic electrolytic aluminum social inventory at 626,000 tons, indicating a slight accumulation of 6,000 tons [2] Group 2: Energy Metals - The supply of cobalt raw materials continues to decrease, suggesting a potential surge in cobalt prices, while lithium demand is expected to strengthen during the traditional peak season [3] - The market is entering a phase of increased supply and demand for lithium, with expectations of a tight supply situation, leading to a sustained strong price for lithium carbonate [3] - Nickel prices are expected to rise due to limited supply from nickel salt plants and high raw material costs, with ongoing demand from downstream enterprises [3] Group 3: Precious Metals - The weak U.S. employment data and inflation aligning with expectations have bolstered confidence in a Federal Reserve rate cut, leading to an upward shift in gold and silver prices [4] - The legal and economic uncertainties from tariff disputes are expected to increase safe-haven demand, supporting gold prices [4] - Central bank gold purchases and weakening U.S. dollar credit are anticipated to drive gold prices higher, presenting opportunities for investment in the gold sector [4]