New stock outlook| The new project "taking over" contributes to the increase, will the listing of CNGR Advanced Material (300919.SZ) on the Hong Kong stock market become a key step in exploring overseas "gold"?

In order to accelerate expansion and shift gears towards internationalization, CNGR Advanced Material (300919.SZ), the leading enterprise in the ternary precursor field, has officially begun planning for a listing on the Hong Kong Stock Exchange. Recently, CNGR Advanced Material submitted its application to the Hong Kong Stock Exchange. In 2024, the company's revenue from overseas reached 17.884 billion yuan, accounting for 44.5% of the total revenue, an increase of more than 10 percentage points from two years ago. According to CNGR Advanced Material, global integrated operations have become the main driving force for the company's rapid growth. In order to align with its global strategy, CNGR Advanced Material will further integrate into the global new energy value chain through global production bases. Currently, CNGR Advanced Material is rapidly expanding the production capacity of its bases in Indonesia and Morocco, and evaluating plans to build the first nickel-based material production line in South Korea. By solidifying its leading position through global layout, this may explain why CNGR Advanced Material is looking towards the Hong Kong stock market after listing on the A-share market for over four years. After all, as one of the international financial centers, if CNGR Advanced Material can successfully list in Hong Kong, it is expected to greatly benefit from utilizing international capital and resources to accelerate its overseas market layout. Will new projects contribute to incremental growth? CNGR Advanced Material's history can be traced back to 2014, and after years of development, the company has been the global leader in nickel-based and cobalt-based lithium-ion battery precursor (pCAM) production since 2020. In the first quarter of this year, CNGR Advanced Material also became the world's top independent supplier of phosphorus-based pCAM materials. In terms of business composition, CNGR Advanced Material has established a vertically integrated business model, with a product matrix including nickel-based, cobalt-based, phosphorus-based, sodium-based, and other innovative materials, as well as new energy metal products. From 2022 to 2024, CNGR Advanced Material achieved revenues of 30.344 billion yuan, 34.273 billion yuan, and 40.223 billion yuan, respectively. Behind the steady growth in revenue lies the continuous improvement of the company's business scope and the continuous contribution of new products. The prospectus shows that during the reporting period, the revenue contribution from new energy metal products at CNGR Advanced Material increased from zero to 13.483 billion yuan by 2024, accounting for 33.5%; while other businesses increased from 2.521 billion yuan in 2022 to 7.642 billion yuan in 2024, accounting for 19%. In 2024, the significant increase in revenue from new energy metal products at CNGR Advanced Material was due to the company expanding its nickel production and strategically selling more nickel products to a wider market; while the growth in revenue from other businesses was related to the expansion of the business segment and increased metal trading through the use of expertise. However, the traditional new energy battery material sector, which is a traditional strength of CNGR Advanced Material, saw a decrease in revenue and share during the period. It is worth mentioning that there are still structural highlights, such as other innovative materials including sodium-based and manganese-based pCAM finally contributing revenue in 2024, although the current scale is still less than 100 million yuan, it may become a growth point in the future. In 2024, the revenue from nickel-based and cobalt-based materials at CNGR Advanced Material both recorded significant declines, with the former decreasing by 25.6% year-on-year and the latter by 24.1%. Further analysis shows that the decline in revenue for nickel-based materials was mainly due to a decline in both volume and price of the products that year, with sales volume decreasing from 211,300 tons in 2023 to 194,900 tons in 2024, and the average selling price also dropping from 102,900 yuan per ton to 82,900 yuan per ton. In the same year, although the sales volume of cobalt-based materials slightly increased from the previous year, the average selling price fell sharply from 155,800 yuan per ton in the previous year to 106,600 yuan per ton, severely affecting the revenue performance of the product. In terms of profitability, from 2022 to 2024, CNGR Advanced Material's gross profit was 3.381 billion yuan, 4.576 billion yuan, and 4.842 billion yuan, with corresponding gross profit margins of 11.1%, 13.4%, and 12%, respectively. During the same period, the company's net profit was 1.539 billion yuan, 2.1 billion yuan, and 1.788 billion yuan. It can be seen that relying on integrated layout, the revenue scale of CNGR Advanced Material has continued to rise in 2024, but the net profit of the company in this year did not continue to increase, instead decreasing by 14.9% compared to the previous year. Creating a platform-type material company through integrated layout? Looking at the performance trend of CNGR Advanced Material in recent years, as well as a series of operational trends, "globalization" and "integration" have become key words in the company's long-term strategy. GMTEight believes that, in a sense, the growth trajectory of CNGR Advanced Material can be seen as a microcosm of the development of the new energy materials industry. Over the years, the new energy materials industry has undergone profound changes from the era of 1.0 products to the era of 3.0 industrial ecology. In the current 3.0 era, new energy material companies like CNGR Advanced Material are actively trying to build a complete and coordinated ecosystem. Vertically, they are forming a seamless transition from resource extraction to smelting, material manufacturing, and secondary capital financing.Closed-loop recycling.In the process of continuously expanding business, going global is probably a "must-have" for CNGR Advanced Material. After all, the current domestic material market is highly competitive, combined with the rise of local protection policies overseas, global service capabilities and supply capabilities have become key factors in industry competition in the era of major changes. As mentioned earlier, CNGR Advanced Material has already established four major raw material bases in Indonesia, and is accelerating the construction of material bases in countries such as South Korea and Morocco, with business coverage in Japan, South Korea, Southeast Asia, Europe, and North America. However, it should be noted that as CNGR Advanced Material moves towards becoming a platform-based material company, the company is expected to be affected by factors such as fluctuations in raw material prices and high market competitiveness. For example, in the years 2022-2024, these costs will account for 93.8%, 90.2%, and 83.8% of the company's annual total sales costs, respectively, and fluctuations in the prices of nickel and cobalt will have a significant impact on the company's performance. Taking nickel as an example, institutions predict that this year the nickel industry chain will still maintain a surplus situation of supply exceeding demand, but the extent of the surplus is expected to decrease. Considering that in 2024, Indonesia's nickel production will account for about 70% of global demand, future Indonesian nickel-related policies will still be the main variables affecting the fundamentals of this metal. In the years 2022-2024, due to the decline in nickel and cobalt prices, the pricing of nickel-based pCAM will continue to decline. The future price trends of metals such as nickel still need to be closely monitored. For CNGR Advanced Material, the fluctuation in prices of key resources such as nickel in recent years can be said to be a "headache" for the company's profitability. Through capacity going global, deepening upstream resource layout, and even forming a global integrated layout, CNGR Advanced Material may enhance its risk resistance ability, and its profit stability may also improve. From this perspective, the necessity and importance of CNGR Advanced Material going global are self-evident. In the future, GMTEight will keep an eye on whether CNGR Advanced Material, which needs to grasp both globalization and integration, will be welcomed by Hong Kong stock market investors.