Dongwu Securities: maintain a "buy" rating on Huayou Cobalt, with a target price of 53 yuan.

Dongwu Securities research report pointed out that Huayou Cobalt released a performance forecast for the first half of 2025, with impressive performance in Q2, further improvement quarter-on-quarter, and performance in line with market expectations. The nickel wet process project continues to overproduce, with stable profit per ton maintained. It is expected that the shipments of nickel intermediate products in Q2 2025 will be above 70,000 tons, staying flat on a quarterly basis; the wet process projects of Huayue with 60,000 tons and Huafei with 120,000 tons continue to overproduce, while the pyrometallurgical projects of Huake with 45,000 tons and Qingtian with 20,000 tons operate steadily. We estimate that the shipments of nickel intermediate products in 2025 will be above 280,000 tons. The rise in cobalt prices starting from Q2 will release the performance elasticity, and the second wave of price increases may come in the second half of the year. In 2025, the company's Indonesian wet process nickel smelting project will have 20,000 tons of cobalt by-products, corresponding to equity of 12,000 tons. The average cobalt price in Q2 2025 has risen to 240,000, with an estimated profit increase of around 200 million in Q2. In addition, positive electrode materials have seen a significant recovery in sales in Q2, with a potential 50% growth for the whole year. Due to the strong sustainability of the rise in cobalt prices, we have raised our profit forecasts for 2025-2027, considering nickel is still at the bottom, giving a 15xPE ratio for 2025 and a target price of 53 yuan, maintaining a "buy" rating.