Huayou Cobalt (603799): Decline in cobalt prices affects the continuous improvement of the industrial chain layout

Huayou Cobalt (603799): Decline in cobalt prices affects the continuous improvement of the industrial chain layout

Brief performance review The company released the 2019 first quarter report, reporting that the two companies achieved operating income44.

01 yuan, an annual increase of 28.

28%; net profit attributable to mother is 1235.

630,000 yuan, down 98 every year.


The first quarter results of business analysis increased significantly, and the decline in cobalt prices led the way.

The company achieved 44 operating income in 1Q19.

10,000 yuan, an increase of 28 in ten years.

28%, but only 0 compared to 4Q18.

5%; net profit attributable to mother is 1235.

630,000 yuan, down 98 every year.

55%; deducting non-net 北京夜网 profit is 1666.

190,000 yuan, down 98 every year.


During the reporting period, the company’s gross margin / net margin was 12 respectively.

0% /-0.

2% per year -23.

1 point / -25.


At the same time, following 4Q18, 6 was accrued.

After 96 million asset impairment losses, the company again accrued asset impairment losses in 1Q19.

61 ppm, an increase of 1 per year.

1.7 billion.

According to Shanghai Nonferrous Networks, domestic electrolytic cobalt prices fell 46% year-on-year in the first quarter of 1919.

3%, down 25% from the previous month.


Cobalt products contributed about 66% of the company’s operating income. The significant drop in cobalt prices led to a decrease in the company’s gross profit margin and an increase in inventory impairment losses, which affected the company’s 都市夜网 performance.

Cobalt prices have picked up in the second quarter, and performance is expected to rebound further.

Due to the replenishment of the industrial chain and the improvement of downstream demand, according to the Shanghai Nonferrous Metals quoted price, since late March, the domestic prices of cobalt sulfate and tricobalt tetroxide have respectively increased from 4.

6 and 17.

50,000 / ton rose to 5.

3 and 200,000 / ton, an increase of nearly 15.

2% and 14.


Initially, due to the limited increase of ore below 30 mn / ton, the supply is subject to a certain degree of suppression, and the demand continues to grow, and the price center gradually moves closer to 300,000 / ton.

Therefore, the company’s first-quarter performance may be a low point of expected results, and the second-quarter performance improvement is expected.

Controlling resources, expanding the market, and improving the layout of the industrial chain.

Through transformation and mergers and acquisitions, the company’s upstream and downstream production capacity has continued to increase.By the end of 2019, the company is expected to form 3.

The cobalt smelting capacity of 90,000 metal tons is close to 2 of the initial supply capacity of cobalt raw materials, and 3.

7 cathode crude copper capacity and 7.

3 positive electrode copper production capacity, 6.

5 Initial ternary precursor capacity.

The company has stepped up efforts to lay out upstream mine resources, and strives to increase the self-sufficiency rate of ore to reduce costs; actively extending downstream of the industrial chain can increase the company’s profitability, and help expand the company’s cobalt salt sales channels and strengthen the coordination of the company’s different business segmentseffect.

Earnings adjustments and investment recommendations maintain earnings forecasts. The net profit attributable to mothers for 2019-2021 is 2 respectively.



22 trillion, corresponding to 0 EPS.



99 yuan.

Consider the cobalt price bottoming out and maintain the company’s buy rating.

The risks indicate that the potential downward price of cobalt price will lead to the company’s performance risk; the expected risk of a sharp decline in the sales of new energy vehicles; and changes in the political situation in the Congo (Kinshasa) cause the company’s local project to replace the scheduled production risk.