In-Depth Analysis of Huayou Cobalt (SH603799)'s Integrated Layout of New Energy Full Industry Chain

Based on the collected information, I have prepared an in-depth analysis report on the integrated layout of Huayou Cobalt (SH603799).

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Zhejiang Huayou Cobalt Co., Ltd. was founded in 2002, with its headquarters in Tongxiang, Zhejiang. It is a high-tech enterprise engaged in the R&D and manufacturing of new energy lithium battery materials and new cobalt materials. After more than 20 years of development, the company has established an operating pattern of “Overseas Resources, International Manufacturing, Global Market” and built five business segments:

[0][1].

The company’s largest shareholder is Huayou Holdings, and the second largest shareholder is Chen Xuehua. Huayou Holdings and Chen Xuehua are acting in concert, with Chen Xuehua as the actual controller. The company’s business covers the entire industry chain of new energy lithium battery materials, including nickel-cobalt-lithium resource development, green refining of non-ferrous metals, R&D and manufacturing of lithium battery materials, and resource recycling[0].

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Huayou Cobalt adheres to the “

” strategy, building a diversified resource guarantee system globally:

• Resource Source
  : The company has laid out copper-cobalt ore resources in the DRC through the DMK project
• Cobalt Output
  : The Indonesian project can stably supply
  18,000 tons of cobalt products per year
  as a by-product of nickel without incurring additional costs[1]
• Strategic Value
  : Diversified resource layout effectively reduces supply chain risks

• Huafei Project
  : The hydrometallurgical project with an annual output of 120,000 tons of nickel metal has reached and exceeded its designed capacity[2]
• Pomalaa Project
  : The hydrometallurgical project with an annual output of 120,000 tons of nickel metal has started construction[2]
• Sorowako Project
  : Preparatory work for the hydrometallurgical project with an annual output of 60,000 tons of nickel metal is progressing in an orderly manner[2]
• Current Capacity
  : An annual nickel hydrometallurgy capacity of 180,000 tons has been formed, and the company plans to build another 180,000 tons/year hydrometallurgical nickel project in the future[1]

• Resource Volume
  : Through supplementary exploration, the proven resource volume of the Arcadia Lithium Mine has increased to
  2.45 million tons
  , with the grade increased to
  1.34%
  [2]
• Lithium Sulfate Project
  : The 50,000-ton/year lithium sulfate project has entered the equipment installation phase, and construction is expected to be completed by the end of the year[2]
• Lithium Salt Capacity
  : The lithium salt capacity is expected to reach
  120,000 tons/year
  in 2027, representing a significant increase compared to the output of around 40,000 tons in 2024[2]

• Technical Route
  : The company adopts a
  low-cost hydrometallurgical process
  , which has obvious advantages over pyrometallurgical processes
• Cost Advantage
  : The cost of hydrometallurgical nickel has an advantage of approximately
  USD 3,000 per ton
  compared to pyrometallurgical nickel when converted to electrolytic nickel[1]
• Profitability
  : It can still maintain considerable profits even at the bottom of the nickel price cycle

• Collaborative Production
  : Cobalt is mainly produced as a by-product of nickel, with high resource utilization efficiency
• Cost Advantage
  : Indonesian cobalt products do not incur additional costs themselves, and have
  high profit elasticity
  against the backdrop of rising cobalt prices[1]

• Lithium Sulfate Project
  : After putting into production, it will significantly reduce transportation costs, and the cost of lithium salt is expected to drop to
  below RMB 60,000 per ton
  [2]
• Lithium Self-Sufficiency Rate
  : Self-owned mines improve the lithium self-sufficiency rate, further reducing raw material costs

• Capacity Layout
  : The first phase of the 50,000-ton ternary precursor project of Huanneng Indonesia has achieved mass supply[2]
• Technical Advantage
  : Ultra-high nickel Series 9 products account for more than
  60%
  , with obvious leading product advantages[2]

• Quzhou Base
  : Its subsidiary Quzhou New Energy is an important production base for cathode materials
• Overseas Layout
  : The first phase of the 25,000-ton cathode material project in Hungary is progressing smoothly and is expected to be completed within the year[2]
• Capacity Plan
  : The capacity on the materials side will continue to expand to strengthen the global layout

The company actively lays out the business of

, builds a circular economy system, realizes sustainable resource utilization, and conforms to the green development direction of the new energy industry.

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The integrated layout of Huayou Cobalt has achieved seamless connection from resources to materials:

Segment	Core Capability	Competitive Advantage
Upstream Resources	Global multi-metal resource layout	Diversified resource guarantees, reduced supply chain risks
Midstream Smelting	Low-cost hydrometallurgical process	Cost advantage of USD 3,000 per ton, profitable even at the bottom of the cycle
Downstream Materials	High-nickel product technology	Series 9 products account for over 60%, leading product strategy
Customer Binding	Long-term agreement guarantee	Signed a 2026-2030 long-term supply agreement with LGES

The company has signed a long-term order agreement with LG Energy Solution (LGES), further enhancing the competitiveness of its lithium battery materials:

• Ternary Precursors
  : Its subsidiary Quzhou New Energy has signed a “Ternary Precursor Supply Agreement” with LGES. It is expected to supply a total of approximately
  76,000 tons
  of ternary precursor products to LGES and its designated purchasers during 2026-2030[2]
• Ternary Cathode Materials
  : Bamo Hungary has signed a “Basic Procurement Contract” for ternary materials with LGES’ Polish plant. It is expected to sell a total of approximately
  88,000 tons
  of battery ternary cathode materials during 2026-2030[2]

Business Segment	Source of Cost Advantage	Degree of Advantage
Nickel Business	Hydrometallurgical process vs. pyrometallurgical process	~USD 3,000 per ton
Lithium Business	Self-owned mines + lithium sulfate project	Below RMB 60,000 per ton
Cobalt Business	By-product of nickel, no additional costs	High profit elasticity

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• Price Bottom
  : Currently, nickel prices have fallen near the pyrometallurgical cost line, with limited room for further decline[1]
• Supply Disturbances
  : If there are disturbances on the nickel supply side, the company’s nickel segment profits are expected to increase once nickel prices rise
• Capacity Expansion
  : The company has in-depth layout of the Indonesian nickel industry chain, with room for doubled capacity growth

• Export Quota Policy
  : The DRC’s export quota for 2025 is 18,125 tons, and the quotas for 2026 and 2027 are both 96,600 tons, which is less than half of the DRC’s cobalt output in 2024[2]
• Supply-Demand Gap
  : The global metal cobalt supply-demand balance for 2025-2027 is -75,000/-33,000/-33,000 tons (negative values indicate shortage)[2]
• Price Outlook
  : The cobalt price center is expected to remain at a high level, and the company will benefit significantly as a cobalt product supplier

• Better-Than-Expected Demand
  : Energy storage demand continues to grow beyond expectations, and the supply-demand pattern of the lithium industry continues to improve[2]
• Upward Price Center
  : The lithium price center is expected to rise, and the company’s lithium business is expected to achieve
  volume and price growth
• Capacity Release
  : After the lithium sulfate project is put into production, the lithium salt capacity is expected to reach 120,000 tons/year in 2027

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Indicator	Value	Industry Position
Market Capitalization	USD 142.7 Billion	Industry Leader
P/E Ratio (TTM)	24.48x	Reasonable Range
P/B Ratio	2.75x	-
ROE	13.20%	Good
Net Profit Margin	7.19%	-

The company’s 2025 Q3 report shows:

• Total Operating Revenue
  : RMB 58.94 billion, YoY +29.6%[2]
• Net Profit Attributable to Shareholders
  : RMB 4.22 billion, YoY +39.6%[2]
• Q3 Single Quarter
  : Net profit attributable to shareholders was RMB 1.51 billion, YoY +11.5%, QoQ +3.2%[2]

Year	Net Profit Attributable to Shareholders (RMB 100 Million)	PE	Rating
2025	57.91-61.9	21x	Buy
2026	82.4-101.08	12-14x	Buy
2027	105.28-156.3	8-11x	Buy

Shenwan Hongyuan expects the company’s net profit attributable to shareholders in 2025-2027 to be RMB 5.791/10.108/15.63 billion respectively, corresponding to PE ratios of 21/12/8x. The PE ratios for 2026-2027 are lower than the average level of comparable companies[1].

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1. New energy vehicle and 3C battery demand fails to meet expectations
2. Global cobalt and nickel ore mining and production progress exceeds expectations
3. Price competition exceeds expectations
4. Overseas operation and exchange rate risks
5. Risk of changes in Indonesian nickel ore policies
6. DRC relaxes cobalt export controls
7. Progress of new projects fails to meet expectations

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As a leading player in the integrated full industry chain of new energy lithium battery materials, Huayou Cobalt has the following investment highlights:

1. Outstanding Integration Advantage
   : Has formed a full industry chain layout of “Resources - Smelting - Materials - Recycling” with significant synergy effects
2. Obvious Cost Advantage
   : Hydrometallurgical nickel process and self-owned lithium mines bring significant cost competitiveness
3. High Price Elasticity
   : Cobalt and lithium prices are at historical lows; once prices rise, performance is expected to grow significantly
4. Good Customer Binding
   : Signed a long-term agreement with LGES to lock in future sales volume
5. Continuous Capacity Expansion
   : Nickel, cobalt, and lithium capacities all have clear expansion plans, with definite growth potential

The current stock price corresponds to PE ratios of 21/14/11x for 2025-2027, maintaining a “

” rating[1][2].

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[0] Huayuan Securities - Research Report on Huayou Cobalt (603799.SH) (https://pdf.dfcfw.com/pdf/H3_AP202504291664527749_1.pdf)

[1] Shenwan Hongyuan - Integrated Layout of New Energy Full Industry Chain, Accelerated Release of Cobalt and Lithium Business Elasticity (https://basic.10jqka.com.cn/603799/worth.html)

[2] Huaan Securities - Integration Advantages Emerge, Expected to Benefit from Rising Cobalt Prices in the Future (https://basic.10jqka.com.cn/603799/worth.html)

[0] Gilin API Company Overview Data

[0] Gilin API Financial Analysis Data

[0] Gilin API Technical Analysis Data