Huayou Cobalt (603799) Interim Review: The turning point in performance is approaching, and bullish cobalt prices will bring marginal improvement
I. Overview of the event The company released the 2019 semi-annual report on August 28, 2019, and the company achieved revenue of 91 in the first half of the year.
40,000 yuan, an increase of 34 in ten years.
21%; net profit attributable to mother is 32.83 million yuan, every 97 years.
Second, analyze and judge the impact of metal cobalt price fluctuations on performance. The trading business dragged down the gross profit margin of 2019H1 by 12% to 26.
46pct, 上海夜网论坛 mainly from: 1) Cobalt price fell 32 in the first half of the year.
57%, the average price of Yangtze Nonferrous Cobalt 2019H1 is 28.
RMB 870,000 / ton (2018H1 average price 62.
6 million / ton), a decrease of 54%.
2) The trading business brings 2019H1 revenue growth, but has dragged down the company’s gross profit margin.
At the same time, the company’s asset impairment losses in the first half of the year amounted to 3.
26 ppm, mainly due to a significant decrease in cobalt prices, provision for inventory impairment.
The supply and demand situation in the industry has improved, and since the initial recovery of cobalt prices in the second half of the year, cobalt prices have fallen into the bottom range for 7 months. Overlapping Glencore ‘s KCC crop output in the second quarter fell short of expectations (2.
In March, 37 was the initial target.
37%) and news that the Mutanda mine will be shut down for maintenance and overhaul at the end of 2019. Electric field prices have continued to rebound. The price of non-ferrous cobalt in the Yangtze River has increased by more than 20% since the bottom.
On the supply side, the reduction in cobalt prices will produce a sharp decline in the output of hand-held minerals; meanwhile, Glencore will revise its capacity index for 2019 (from 5.
7 was reduced to 4 for the first time.
34 budget), so cumulative supply for 2019.
Cobalt prices are still in the bottom range. If Mutanda stops production next year on time, the oversupply situation in 2020 will change in advance, and it may go out of the bottom in the long run.
Proposed acquisition of Bamo Technology to further enhance the layout of downstream battery materials The company announced on April 22 that it intends to acquire 100% equity of Bamo Technology (US $ 3.2 billion) and Huayou Yinzhou 15 in a fixed increase manner.
68% equity (8.
Bamo Technology is mainly engaged in the development, development and large-scale production of lithium-ion battery materials. It is a supplier of lithium batteries and ternary materials for well-known companies such as Ningde Times, BYD, Lishen, Samsung and LG.
As a supplier of Bamo Technology, the synergy effect is expected to be released after the acquisition is completed.
Third, investment recommendations The overall price of cobalt in the second half of the year is optimistic. It is expected that the company’s performance will gradually improve from the previous quarter. The business synergy effect and cost-side improvement brought by the integration of upstream and downstream lithium batteries in the future are still worth looking forward to.
It is expected that EPS for 2019-2021 will be 0.
45 yuan, corresponding to the current sustainable PE is 43/23 / 17X.
At present, the company is below the five-year estimated average, 上海夜网论坛 covering for the first time, giving a “recommended” rating.
4. Risk warning: The price of cobalt continues to fall, the integration is less than expected, and downstream demand declines.