In-Depth Analysis of the Growth of Huayou Cobalt's Ternary Precursor Business

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Huayou Cobalt (Zhejiang Huayou Cobalt Co., Ltd., Stock Code: 603799.SH) is a leading cobalt product supplier in China and even globally. In recent years, it has successfully transformed its strategy into an integrated enterprise of new energy lithium battery materials. The company has built a complete industrial chain closed-loop of “African resources - Indonesian smelting - Chinese processing - global sales”, covering the mining, dressing, and smelting of non-ferrous metals such as cobalt, nickel, and copper, as well as the R&D and production of core lithium battery materials including ternary precursors and ternary cathode materials[0][1].

Indicator	Value
Market Capitalization	$142.71 billion (approx. RMB 720 billion)[0]
Current Stock Price	$76.15 (close on January 19, 2026)[0]
1-Year Gain	+155.97%[0]
2025 Expected Net Profit Attributable to Shareholders	RMB 5.85-6.45 billion (median: RMB 6.15 billion)[1]
2025 Expected Performance Growth Rate	40.80%-55.24%[1]

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Based on company announcements and industry data, the performance of Huayou Cobalt’s ternary precursor business in recent years is as follows:

Time Period	Ternary Precursor Shipment Volume	YoY Change	Ternary Cathode Material Shipment Volume	YoY Change
2023	85,000 tons	—	58,000 tons	—
2024	92,000 tons	+8.24%	71,000 tons	+22.41%
H1 2025	42,100 tons	Proactive structure optimization	39,600 tons	+17.68%
2025 Forecast	90,000 tons	Resumed growth	85,000 tons	Continuous improvement

: In H1 2025, the ternary precursor shipment volume reached 42,100 tons, a decline compared to the same period last year, mainly due to the company’s initiative to reduce shipments of some low-profit products, optimize product structure, and focus on the high-end market[1][2]. Despite the short-term adjustment in precursor shipment volume, the ternary cathode material shipment volume increased by 17.68% YoY, indicating that the company’s strategy of extending from a pure precursor supplier to integrated cathode material production has achieved results.

Nickel and cobalt products, as the core raw material support for the precursor business, have achieved significant revenue growth:

• Nickel Products
  : 2024 shipment volume reached 184,300 metal tons, a YoY surge of 46%; H1 2025 revenue reached RMB 12.837 billion, a YoY surge of 137%[1]
• Cobalt Products
  : Benefiting from the price rebound, the gross profit margin climbed to 32%, an increase of 15 percentage points YoY[1]
• Ternary Cathode Materials
  : In H1 2025, export volume accounted for 57% of China’s total ternary cathode material exports[1]

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Huayou Cobalt has built a domestic-overseas linked ternary precursor production capacity system:

Project Name	Location	Equity Stake	Production Capacity	Production Status
Indonesia Huaneng Phase I	Indonesia Weda Bay Industrial Park	100%	25,000 tons/year	In Mass Production
Indonesia Huaneng Phase II	Indonesia Weda Bay Industrial Park	100%	25,000 tons/year	Fully completed in February 2025
Guangxi Bamo	Yulin, Guangxi	100%	100,000 tons/year	Under Construction
Huajin Company	Quzhou, Zhejiang	51% (Huayou’s stake: 20.51%)	40,000 tons/year	Stable Mass Production
Huapu Company	Jiaxing, Zhejiang	60% (Huayou’s stake: 24.14%)	30,000 tons/year	Stable Mass Production

: Approximately 200,000 tons/year (precursors), with an additional 100,000 tons/year under construction[2][3]

is Huayou Cobalt’s first overseas precursor production capacity project, with competitive advantages of an integrated industrial chain featuring seamless connection from resources to materials and comprehensive supporting public utilities in the park[3]:

• April 2024
  : Construction of Huaneng Project Phase I commenced
• October 18, 2024
  : The completion and commissioning ceremony of Phase I’s main structure was successfully held, making it the first new energy lithium battery ternary material project in Indonesia to have its main factory structure completed and put into production
• February 28, 2025
  : Phase II’s mechanical works were fully completed, with both Phase I and II fully built
• Client Binding
  : This project is bound with high-quality North American clients, and is expected to contribute incremental profits as production capacity gradually ramps up

Project	Location	Expected Production Capacity	Expected Commissioning Time	Strategic Significance
Pomalaa Hydrometallurgical Project	Indonesia	120,000 tons of nickel metal/year	End of 2026	Cooperation with Vale and Ford
Sorowako Hydrometallurgical Project	Indonesia	60,000 tons of nickel metal/year	End of 2027	Further enhancement of nickel resource reserves
Hungary Cathode Material Project	Hungary	25,000 tons/year	End of 2025	Core base serving the European market
Guangxi Bamo Precursor Project	Guangxi	100,000 tons/year	Early 2025	Covering domestic and export markets

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Huayou Cobalt continues to strengthen its leading technological advantages in the precursor field, with a total of 1,488 patent applications and 604 authorized patents[1][2]:

Technology/Product	Performance Indicator	Technological Advantage
NCM811 High-Nickel Low-Cobalt Precursor	Energy density: 280Wh/kg	15% higher than the industry average
In-Situ Polymerization Coating Technology	Cycle life of ternary materials	Exceeded 3,000 cycles
Ultra-High-Nickel Single-Crystal Precursor (93DS)	Mass production achieved	Accurately matching the demand for high-end new energy batteries
High-Nickel Low-Cobalt Material Doping Technology	Cobalt dosage	Controlled below 5%, achieving cost reduction and efficiency improvement

• Over 50 medium and high-nickel ternary precursor
  products lead in global certifications
• Sodium Battery PolyAnion Precursor
  : Process finalization achieved, entering the energy storage market
• Lithium-Rich Manganese-Based Precursor
  : First-generation finalized, second-generation pre-R&D, entering the supply chain for solid-state/low-altitude/robot applications
• Ultra-High-Nickel Series 9 Products
  : In H1 2025, its proportion increased to over 60%, and export volume accounted for 57% of China’s total ternary cathode material exports[1][2]

Technology Direction	Partner/Progress	Application Scenario
Semi-Solid Battery Cathode Material	Joint development with Weilan New Energy	Already applied to models such as NIO ET7
All-Solid Battery Cathode Material	Entered verification phase with leading automakers	Technological reserves lead the industry by 1-2 years
Automotive Large Cylindrical Battery Material	Mass production achieved	Matching Tesla 4680 and BMW 6th-generation large cylindrical batteries

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Huayou Cobalt has successfully entered the supply chains of global top battery enterprises:

Customer Type	Customer Name	Cooperation Depth
Global Power Battery Leader	LGES (LG Energy Solution)	Signed 5-year long-term supply contract in September 2025
Domestic Battery Leader	CATL, EVE Energy	Strategic Cooperation
International Automaker Supply Chain	Tesla, Volkswagen, BMW, Hyundai, Stellantis, GM, Ford	Entered core supply chain
Other Leading Enterprises	Envision AESC, CALB	In-Depth Cooperation

, three subsidiaries of Huayou Cobalt signed two long-term supply contracts with LGES and its subsidiaries[1][3]:

Supplied Product	Supply Volume	Supply Period
Ternary Precursor	76,000 tons	2026-2030 (5 years)
Ternary Cathode Material	88,000 tons	2026-2030 (5 years)
Total	164,000 tons	5 years

: Locks in stable orders for future performance growth, reduces market fluctuation risks, and ensures production capacity absorption.

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According to statistics from Xinluo Information, the global ternary precursor output in 2024 was 963,000 tons, among which Huayou Cobalt ranked among the top in the industry[4]. In terms of ternary cathode materials, the company’s export volume accounts for 57% of China’s total ternary cathode material exports, firmly ranking first in the industry[1].

Company	2024 Ternary Precursor Capacity/Shipment	Competitive Advantage
Huayou Cobalt	Approx. 92,000 tons shipped, 200,000 tons capacity	Integrated industrial chain, leading technology
Zhongwei Co., Ltd.	Leading in the industry	Accelerated production capacity layout in Indonesia
GEM	Top 5	Advantages in recycling business
Hunan Bangpu	Top 5	Within CATL’s ecosystem

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Financial Indicator	2024	H1 2025	2025 Forecast
Operating Revenue	RMB 37.197 billion (H1)	RMB 37.197 billion	23.78% YoY growth
Net Profit Attributable to Shareholders	RMB 2.711 billion (H1)	RMB 2.711 billion	+62.26% YoY
Non-Recurring Net Profit	RMB 2.587 billion (H1)	RMB 2.587 billion	+47.68% YoY
Gross Profit Margin (Cobalt Products)	32%	32%	+15 percentage points YoY

• Nickel Products
  : In H1 2025, revenue reached RMB 12.837 billion, a YoY surge of 137%, becoming the main driver of performance growth[1]
• Cobalt Products
  : Gross profit margin climbed to 32%, benefiting from the rebound in cobalt prices
• Integration Advantage
  : The company’s “mine - smelting - material” integrated layout effectively reduces costs and improves gross profit margin

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Driver	Specific Performance
Increased Penetration Rate of New Energy Vehicles	In 2024, the penetration rate of domestic new energy passenger vehicles reached 49.4%[4]
Accelerated High-Nickel Trend	In 2024, the high-nickel proportion of global ternary precursors reached 55%, an increase of 3 percentage points compared to the previous year[4]
Commercialization of Solid-State Batteries	GGII predicts that solid-state battery shipments will exceed 65GWh in 2030[4]
Low-Altitude Economy/Robots	Emerging application scenarios drive increased demand for high-energy-density batteries
Overseas Production Capacity Layout	Indonesia and Hungary projects seize first-mover advantages in the global market

Indicator	2025E	2026E	2027E
Net Profit Attributable to Shareholders	RMB 6.048 billion	RMB 7.096 billion	RMB 8.336 billion
PE (Based on August 2025 Stock Price)	14X	12X	10X

(Data Source: Minsheng Securities Research Report[3])

Risk Type	Risk Description
Fluctuations in Metal Prices	The company’s profit fluctuates with the prices of nickel, cobalt, and lithium
Industry Overcapacity	Intensified competition in the ternary material industry
Policy Risk	Adjustment of export tax rebate policy (ternary precursors will no longer enjoy 13% VAT export tax rebate from April 2026)[4]
Demand Below Expectations	Slowdown in sales growth of new energy vehicles

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Huayou Cobalt’s precursor business shows a development trend of

:

1. Short-Term (2025)
   : Proactively optimizes product structure, reduces shipments of low-profit products, focuses on the high-end market; although shipment volume has adjusted, profitability has improved

2. Mid-Term (2025-2027)
   :
   • The production capacity of the Indonesia Huaneng Project is gradually released, bound with high-quality North American clients
   • The 5-year long-term contract with LGES locks in 164,000 tons of supply orders
   • The Hungary project seizes first-mover advantages in the European market

3. Long-Term (After 2027)
   :
   • The commissioning of Pomalaa and Sorowako projects ensures resource supply
   • Technological reserves for solid-state batteries lead the industry by 1-2 years
   • The advantages of the integrated industrial chain continue to be consolidated

Highlight	Details
Prominent Cyclical Growth Attributes	Perfect upstream resource layout builds a solid moat
High Technological Barriers	Over 50 products lead in global certifications, with intensive patent layout
High-Quality Clients	Entered the global top supply chains of LGES, CATL, Tesla, etc.
Reasonable Valuation	2025 estimated PE is about 14x, lower than the industry average

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[0] Jinling API - Huayou Cobalt Company Overview and Market Data (January 19, 2026)

[1] East Money - “Huayou Cobalt: Raking in RMB 6 Billion in Net Profit! Nickel and Cobalt Reserves Continue to Increase, Transforming Resource Advantages into Profit Momentum” (https://caifuhao.eastmoney.com/news/20260106170331340943930)

[2] Huayou Cobalt 2025 Semi-Annual Report (https://www.huayou.com/Public/Uploads/uploadfile/files/20250919/20250818603799.SHhuayouye603799huayouye2025nianbanniandubaogao.pdf)

[3] Minsheng Securities - Huayou Cobalt Research Report: “Sustained Rapid Performance Growth, Prominent Cyclical Growth Attributes” (https://pdf.dfcfw.com/pdf/H3_AP202508261734693479_1.pdf)

[4] Huayou Cobalt 2024 Annual General Meeting Materials (https://www.huayou.com/Public/Uploads/uploadfile/files/20250512/20250430603799.SHhuayouye603799huayouye2024nianniandugudongdahuihuiyiziliao.pdf)

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The figure above shows an in-depth analysis of Huayou Cobalt’s precursor business:

• Top Left
  : Annual comparison of ternary material shipment volumes (precursor vs. cathode material)
• Top Right
  : Growth in upstream nickel resource shipment volumes (raw material support for precursors)
• Bottom Left
  : High-nickel trend in the product structure of ternary cathode materials
• Bottom Right
  : Precursor production capacity layout (mass-produced vs. under construction)