Huayou Cobalt (603799): Decline in cobalt prices weighs on short-term performance and future rise in cobalt prices will increase performance

Huayou Cobalt (603799): Decline in cobalt prices weighs on short-term performance and future rise in cobalt prices will increase performance

The company announces the 2019 annual performance forecast: in 2019, the company expects to achieve net profit attributable to its mother to 0.

8 billion-2.

300 million, compared with a profit of 15 in the same period of 2018.

3 trillion, a year of decline of 85% -95%; 2019 is expected to deduct non-attributed net profit is 0.

4 billion-1.

9 trillion, a year-on-year decline of 87% -97%.

We expect that net profit attributable to mothers in Q4 2019 will be approximately zero.

200 million profit 1.

40,000 yuan, at least in the fourth quarter of 2018 can increase by 3.

8 million US dollars increased, down 127 from the Q3 2019.

9%-up 127.

7%, performance was in line with expectations.

The decline in the price of cobalt products in 2019 broke through, resulting in a substantial decline in profit.

Short-term decline in prices of cobalt products in 2019 weighed on performance: In 2019, cobalt trioxide (73.

5%) The annual average price fell by 51.

9% to 192.

3 yuan / kg, of which the average price of Q4 fell by 35.

7%, a month-on-month increase of 17.

4% to 199.

8 yuan / kg; annual average price of cobalt sulfate (20%) decreased by 50.

7% to 5.

1 million / ton, Q4 average price dropped 37.

2%, an increase of 10 from the previous month.

4% to 4.

90,000 yuan / ton; In addition, the average annual price of cobalt oxide (72%) and cobalt carbonate (46%) decreased by 50.

1%, 51.

9%, the average price in the fourth quarter rose 14 respectively.

4%, 18.


The short-term decline in the price of cobalt products in 2019 is large, and most of them have fallen by more than 50%.

Initial integration of the industrial chain, the company may acquire Huayou Luzhou15.

68% equity.

In December 2019, the company may acquire Huayou Luzhou 15.

68% minority shareholders’ equity, 100% control of Huayou Yinzhou.

Huayou Yinzhou’s main products are tricobalt tetroxide, cobalt sulfate, etc., which have a connecting role in the integrated industrial structure of the company from upstream cobalt raw materials to downstream precursors.

At the same time, it is proposed to raise supporting funds for the construction of the “3 ton (metal amount) high-purity ternary power battery-grade nickel sulfate project”, 武汉夜网论坛 which is mainly used for the production of nickel sulfate. After the project is put into production, the company’s overall profit will be increased.ability.

The mid-stream smelter’s high-priced inventory has been cleared, and the resonance of 3C + new energy demand has pushed the cobalt price hub to move up to 35,000 tons / ton.

On October 11, 2019, the import data of domestic cobalt raw materials continued to reorganize month-on-month, and domestic smelters may enter the stage of active destocking. In 2019, the high-priced inventory of midstream smelters has been fully cleared.In the medium and long term, the cobalt price hub may increase to more than 35 million tons per ton, and the conversion of Glencore ‘s guidance for 2020 production cuts exceeds expectations.

2 ± 0.

4) With longer long orders such as SKI and 佛山桑拿网 GEM, the degree of integration of the industrial chain has increased, and the amplitude of cobalt price shocks is expected to gradually narrow.

After the month of December 2019, prices have increased. It is expected that electro-cobalt traders have taken the lead to gradually receive the goods. With the gradual arrival of the consumer season, 2020Q1 smelters and alternative materials companies may start a restocking cycle again to drive prices up. Driven by demand in the field and new energy vehicles, the hub of cobalt prices may move up to 35 million / ton.

Earnings forecast and grade: We adjusted our earnings forecast for the company, and we expect the company to achieve net profit attributable to mothers in 2019-2021.

7.8 billion, 16.

8.7 billion, 19.

69 trillion, EPS is 0.

17 yuan, 1.

56 yuan, 1.

83 yuan, calculated based on the closing price on January 20, 2020, the corresponding PE is 275.

1X, 29.

1X, 24.


Maintain the company’s “prudent overweight” rating.

Risk reminder: the price of cobalt drops, the supply side is fully heavy, its own projects, and downstream demand is less than expected.