If CATL is the leader of lithium batteries, then Huayou Cobalt is the leader of the upstream industry of lithium battery chain.
Huayou Cobalt has six treasures in its hands: cobalt from the Democratic Republic of the Congo, nickel from Indonesia, lithium from Zimbabwe, ternary precursors and cathode lithium battery materials, and low-cost copper. Huayou Cobalt's six treasures are inextricably linked with mainstream lithium batteries. Mainstream lithium battery cathode materials are divided into ternary materials, lithium iron phosphate and lithium cobalt oxide, and the application scenarios of these three materials are different.
The downstream layout of Huayou Cobalt is the ternary cathode material used in the field of passenger cars. Ternary cathode materials refer to cathode materials composed of three transition metal oxide components, nickel, cobalt and manganese, which are adjusted in different proportions. Cobalt is an important raw material for the production of battery cathode materials, and lithium batteries are an important consumption scenario of cobalt.
Among the "six treasures", cobalt is undoubtedly the "pearl in the palm" of Huayou. In the years when Huayou Cobalt was proud, Chen Xuehua, the founder of Huayou Cobalt, was known as the king of the cobalt industry by the outside world. In the years when the rise of the new energy industry drove the cobalt fire, as China's largest cobalt chemical producer, Huayou Cobalt's stock price soared since its listing in 2015, becoming a capital darling, and in 2017, it became a super white horse, and in 2020, it was snapped up by institutional investors.
However, with the saturation of the domestic lithium battery market demand and the shrinking of upstream raw materials, Huayou Cobalt's performance and market value have also been impacted, and its share price has increased from a historical high of more than 110 yuan (before the right to reset) to 27 today25 yuan, the total market value decreased by about 150 billion yuan. Huayou Cobalt's position as China's "King of Cobalt" will also be snatched away by CMOC in 2023. The upstream advantages created by virtue of its early overseas going overseas have gradually lost their luster as many domestic lithium battery companies have gone to sea.
Recently, Chen Xuehua said in an exclusive interview with Caixin that China's lithium battery enterprises should avoid blindly going to sea and fighting for themselves in the process of international operation, and can cooperate with upstream and downstream customers to build an industrial chain and form an industrial alliance to jointly go to sea, and enhance the anti-risk ability and comprehensive competitiveness of enterprises through division of labor and cooperation, complementary advantages.
Huayou Cobalt is in a hurry?
On the two social platforms of Tieba and Xiaohongshu, former employees of Huayou Cobalt have written a lot of complaining posts.
Wang Ying, a former employee of Huayou Cobalt, told Shijie that starting from October 2023, she has also left some people with low compensation costs.
According to Huayou Cobalt's official **, in 2023, Huayou Cobalt said that it would "expand" 2,000 fresh graduates against the trend. Fang Yuan, vice president of Huayou Cobalt, once revealed to ** reporters that in 2022, Huayou Cobalt will recruit more than 6,000 college students. Among them, more than 60% are undergraduates, and there are more than 20 Ph.D. students from Tsinghua University and Peking University.
The city has learned that the scope of Huayou Cobalt's layoffs involves multiple bases, such as Tongxiang and Quzhou. Tongxiang is the headquarters of Huayou Cobalt, which has a core holding subsidiary in Quzhou, called Quzhou Huayou Cobalt New Materials. This company is Huayou Cobalt's new cobalt material base in China, focusing on the deep processing and sales of cobalt and other non-ferrous metals.
When recruiting a large number of fresh graduates to join the company, Huayou did not expect today's market**. At that time, when recruiting people, I thought that the market was very large, so I expanded and reserved talents. But who would have thought that domestic orders had plummeted. Feng Feng, a former employee of Huayou Cobalt, told the city boundary.
In the view of Wang Zhaojiang, executive director of Beishan Changcheng Investment Research Institute, the decrease in Huayou's domestic orders is mainly due to market changes and competitive pressure. "Domestic electric vehicles have been growing rapidly for many years, and the penetration rate of new energy vehicles in 2023 has reached 357%, an increase of 8 year-on-year1 percentage point. There will inevitably be demand adjustments in the short term, and it is impossible to sustain rapid growth all the time. ”
Along with this, the involution of the non-ferrous metal market. According to data from the China Nonferrous Metals Industry Association, in the first three quarters of 2023, China's lithium cobalt oxide output was 890,000 tons, an increase of 367%。This shows that the market is abundant and the competition is fierce. On the other hand, in the overcapacity and changes in the relationship between supply and demand, non-ferrous metals such as nickel and cobalt in the lithium battery market have dived.
Taking cobalt metal as an example, its ** fell from more than 560,000 yuan per ton at the beginning of 2022 to 210,000 yuan per ton in December 2023, basically reaching the production cost line of the mine, hitting a low point in the past three years. Moreover, the price of cobalt shows no signs of bottoming**. If the price of cobalt falls, the performance falls. Huayou, who relies on the sky to eat, is very passive.
In addition to the non-ferrous metal plate, due to high costs, overcapacity and other reasons, the situation of ternary materials in China is also not good: not only is it squeezed by lithium iron phosphate materials, but also in a state of priority digestion inventory.
This has also made Huayou Cobalt's market share in China continue to decline. In the first three quarters of 2023, Huayou Cobalt's sales revenue in the domestic market decreased by 11 year-on-year2%。
Huayou Cobalt's inventory value also increased by 8 percent from the end of the first three quarters of last year8%。Huayou Cobalt's inventory backlog has also been criticized by many investors. At the same time, due to large-scale expansion and long-term net outflow of funds, Huayou Cobalt has a lot of financial pressure. As of the third quarter of 2023, Huayou Cobalt's debt-to-asset ratio was 668%。In addition, the book money funds are nearly 30 billion yuan less than the current liabilities.
In such a situation, the capital market votes with its feet. Huayou Cobalt's share price has been weak since plummeting from its peak. The main reason for this is that, "First, Huayou Cobalt itself has a large market value and a large volume, which is not easy. Second, the current annual report performance has not been disclosed, and the investment funds are still waiting. Wang Zhaojiang told the city boundary.
(Huayou Cobalt's stock price chart in the past 4 years.) ** Straight flush).
Chen Xuehua probably did not expect that Huayou Cobalt, which was once highly sought after by investment institutions, would come to this point.
Chen Xuehua's history of struggle is quite inspiring.
After graduating from junior high school, Chen Xuehua entered a village-run chemical factory in his hometown of Tongxiang, Zhejiang. While doing a side job of selling bean sprouts, while relying on self-learning chemical knowledge, he went from a grassroots employee to a deputy factory director. After the collapse of the chemical plant, Chen Xuehua borrowed 100,000 yuan in 1994 to buy the factory, and renamed it Tonghua Township Xinghua Factory, and began to produce nickel oxide for the ceramic and glass industries, and did some cobalt oxide OEM business by the way.
With the increase in cobalt oxide orders, Chen Xuehua sees the prospect of the cobalt material market: fast growth, no involution. So, in 2002, Chen Xuehua brought in a Taiwanese businessman, Xie Weitong, and introduced the hydrometallurgical technology of the General Institute of Nonferrous Metals from Beijing, focusing on consumer electronics represented by mobile phones, and opened the production field of cobalt oxide. In this year, Tonghua Township Xinghua Chemical Plant was renamed Huayou Cobalt, which means "rooted in China, friends all over the world".
At this time, Huayou Cobalt has become one of the few enterprises that can produce cobalt products in China. But soon, Chen Xuehua encountered the first problem: China, which accounts for only 1% of the world's total cobalt resources, is very short of cobalt. To this end, Chen Xuehua went to Africa in 2003 to look for mines in an attempt to gain a stake in upstream resources. From being familiar with the local humanities, landforms, laws and regulations, to successfully participating in African mines, Huayou spent five or six years.
During this period, Huayou Cobalt has successively established a resource guarantee system integrating mining, dressing and metallurgy through its subsidiaries CDM and MIKAS in the Democratic Republic of the Congo (DRC), Africa, providing low-cost, stable and reliable raw material guarantee for domestic manufacturing platforms. In 2015, when it was successfully listed, Huayou Cobalt officially entered the new energy project and began to specialize in the manufacture of raw materials for lithium batteries.
This year, Huayou Cobalt's annual report shows that the operating income of "cobalt and copper" products was 227.6 billion yuan, 117.9 billion yuan, accounting for 85 percent of operating income84%。At that time, GEM's cobalt product revenue was only 37.5 billion yuan. As a result, Huayou Cobalt was named the "King of Cobalt Industry". Since then, Huayou Cobalt has entered a period of rapid expansion.
In addition to mergers and acquisitions, private placements and other means of capital operation, Huayou also realizes a vertically integrated industrial chain layout through joint ventures and self-construction. On the one hand, Huayou, which is crazy about mergers and acquisitions, has been carrying out large capital expenditures, and on the other hand, in the non-ferrous metal cycle, Huayou is moving towards glory step by step, with both growth and cyclicality.
The growth of Huayou Cobalt is related to the advantages of products and resources. In the soaring price of cobalt, the share price of Huayou Cobalt rose from more than 8 yuan per share at the beginning of its listing in 2015 to 135 on March 15, 2018An all-time high of $80 per share. In 2018, when the capital market was optimistic about Huayou Cobalt, Huayou's important shareholders began to settle down.
This year, Xie Weitong, one of the original actual controllers of Huayou Cobalt, cashed out a total of 150.7 billion yuan. However, from March 2018 to July 2019, the price of cobalt began to deepen, and Huayou Cobalt was also implicated. As a result, since 2019, Huayou Cobalt has begun to extend downward to build the whole industry chain of cathode materials.
In Chen Xuehua's view, whether it is for upstream manufacturers or downstream manufacturers, expanding their own industrial chain is usually able to reduce costs. In 2021, when the actual controller of Huayou was changed from Chen Xuehua and Xie Weitong to Chen Xuehua, Huayou's layout in the ternary cathode materials and ternary precursor industry was completed.
The ternary precursor material, which is essentially nickel-cobalt-manganese hydroxide, is the upstream of the ternary cathode material. The ternary cathode material is nickel-cobalt-lithium manganese oxide, which has one more lithium than the ternary precursor. The ternary precursor material needs to be mixed and fired with lithium salt to obtain the finished ternary cathode material.
At the end of 2021, the market value of Huayou Cobalt soared to 100 billion yuan, and this year, Xie Weitong left the market, cashing out a total of 178 in three years400 million yuan.
In the same year, Chen Xuehua ranked 380th on the 2021 Hurun Report with a value of 18.5 billion yuan, sitting on the throne of the richest man in Tongxiang City. By the end of 2022, Huayou's revenue exceeded 60 billion yuan, far exceeding other peers. With the world's leading production and sales scale, Huayou has become the largest supplier of cobalt products in China. Even the president of the World Cobalt Association sighed: Huayou Cobalt is really a great Chinese company.
Chen Xuehua once analyzed the reasons for the success of Huayou Cobalt from the company level. "The first is persistence, the second is openness, and the third is keeping pace with the times. ”
Chen Xuehua's judgment on the commercial value of the cobalt industry is forward-looking. He made good use of capital, laid out early, and took advantage of the explosion of lithium battery to achieve wealth accumulation. Wang Zhaojiang explained to the city boundary. In fact, Chen Xuehua is not alone. In his early road to wealth, he had Xie Weitong as a partner. From the beginning of Chen Xuehua's entrepreneurship to the purchase of mines in Africa, Xie Weitong has given full support. Before ** Huayou shares cashed out and left the market, Xie Weitong's shareholding once exceeded 80%.
However, this time and that time. In the past two years, Huayou Cobalt's share price has increased from 115 on July 30, 2021The high of $72 per share, all the way to 27 on the morning of March 6, 202425 yuan shares, the market value has evaporated 120 billion yuan in more than two years.
In the eyes of the outside world, Huayou Cobalt's encounter with Waterloo is certainly related to the background of the times, and it is also affected by the decision of the founder Chen Xuehua. "The weakening of the consumer demand cycle is a problem faced by all industries of new energy vehicles. However, capital operation is a double-edged sword, and risk exposure must be controlled within a reasonable range. Wang Zhaojiang told the city boundary.
Chen Xuehua is not unaware of the problems currently encountered by Huayou Cobalt, such as overcapacity in the industry, sluggish stock prices, and slowing performance growth. In the past two years, in order to boost the stock price of A-shares, Chen Xuehua has also taken a series of countermeasures, such as a cumulative capital contribution of 28.1 billion yuan to repurchase the share price of Huayou Cobalt.
In July 2023, Huayou Cobalt also disclosed the 2023 restrictive ** incentive plan (draft), which intends to grant restrictive ** to 2,211 incentive recipients. But it's a pity that Huayou Cobalt's ** has not been obvious** signs. On the contrary, since the second half of 2023, Huayou's share price has fallen by more than 40%. This makes it uncertain whether the incentive plan can be implemented.
Compared with the "dire straits" of the domestic market, there are still acquisition opportunities in the overseas market on the supply side, and there is also a certain market gap on the demand side. In recent years, Huayou Cobalt has frequently acquired various cobalt minerals and metal mining areas such as nickel and copper ores overseas. In addition to the early entry of the Democratic Republic of the Congo (DRC) in Africa, Indonesia is regarded by Chen Xuehua as the new main position of Huayou Cobalt to control upstream resources.
Chen Xuehua concluded that nickel will also become a key resource under the trend of high nickel. High-nickel materials refer to the increase in nickel content in ternary cathode materials, which is a trend to improve energy density.
Minsheng ** pointed out that in terms of nickel, Huayou Cobalt's Huake high glacial nickel project in Indonesia has basically reached production, and Huafei's 120,000 tons of wet nickel will be put into trial production in June 2023, contributing an increase in the second half of the year. In terms of lithium, the Arcadia lithium project in Zimbabwe, Africa, controlled by Huayou, was officially put into trial production at the end of March 2023 and successfully produced the first batch of products.
However, Huayou Cobalt is not the only one that "covets" Indonesia's nickel ore resources and Africa's cobalt and lithium resources. In recent years, global new energy industry chain enterprises have announced their layout in Indonesia, starting a "hunting" action in Indonesia, involving enterprises ranging from materials to terminal car companies, almost throughout the upstream and downstream industrial chain of lithium batteries.
The three giants of ternary precursors in China have gathered in Indonesia. In addition to Huayou Cobalt, GEM and CNGR have laid out a number of nickel and cobalt resource projects in Indonesia through direct investment and shareholding. These projects will be put into operation in 2024-2025. Even Africa, where Huayou Cobalt is deeply cultivated, has also seen an influx of players in recent years.
In China, for example, CMOC and CNMC have invested in copper and cobalt mines in the DRC, taking the opportunity to increase the sustainability of upstream resources. For example, CMOC indirectly holds an 80% interest in the TFM copper-cobalt mine in the Congo, and its cobalt metal output in the first three quarters of 2023 is about 370,000 tons. In such a highly competitive environment, Huayou Cobalt's export revenue in the first three quarters of 2023 fell sharply by 28% year-on-year6%。
But this does not mean that Huayou Cobalt does not have an advantage. Chen Xuehua once said in public that Huayou Cobalt has low-cost nickel, cobalt and lithium resource guarantees, the most complete lithium battery material industry chain in the industry, advanced production capacity from hydrometallurgy to lithium battery cathode manufacturing, and market support covering major global customers. Fully capable of seizing opportunities in full competition to make themselves better and stronger.
What Chen Xuehua said is true. Today, Huayou Cobalt has laid out cobalt-copper, nickel and lithium resources in the upstream, and completed the business structure with cobalt as the core and nickel, copper, manganese and lithium as the supplement in the midstream smelting link, and the downstream ternary precursors, cathode materials and renewable resources have also begun to take shape. Not only that, Huayou Cobalt also has a professional technical team.
As early as 2013, Huayou Cobalt set up a new materials research institute and recruited many technical personnel. By 2020, Huayou's R&D technicians will have 3,284 people. In 2021, Huayou Cobalt's R&D expenses accounted for 231, which is more than 14 times the proportion of R&D expenses of its competitor CMOC. Over the years, Huayou has successively developed and launched a variety of ternary precursors such as high-voltage tetracobalt, small lithium batteries and power, as well as a full range of ternary precursors.
Although Huayou's performance is not as good as it used to be, the company's revenue structure has gradually diversified. In 2022, Huayou Cobalt's business includes cathode materials, ** and others, cobalt products, ternary precursors, and copper products, accounting for the proportions of revenue. 14%。You must know that in 2014, Huayou's cobalt products and copper products accounted for 85% of its revenue84％。
In any case, one thing has to be admitted: it will take some time for Huayou Cobalt to put ternary precursors and ternary materials into production from construction to production. In the eyes of the industry, when the material production capacity has not yet been realized, the stock price changes of Huayou Cobalt are highly resonant with the metal **. "Before 2022, the company's stock price and cobalt price resonated significantly, and after 2022, the company's stock price performance is closely related to nickel. Huayou Cobalt is still a strong metal cycle. ”
Although Huayou Cobalt has made continuous breakthroughs in business diversification and upstream and downstream extension of the industrial chain, the problem of overcapacity in the whole industry is also plaguing it. In this regard, Chen Xuehua said: "Fundamentally speaking, overcapacity should be resolved through full market competition and the market mechanism of survival of the fittest, but it also requires multi-pronged and multi-measures, and needs to innovate ideas and open up new ways to resolve it." ”