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(Original title: Net profit surged in the first half of the year and massive nickel mine acquisitions, why did ST Shengtun's stock price open high and then fall?)

Jiemian News reporter | Song Yiting

ST stocks that have just been "capped" and experienced four consecutive limit dropsShengtun(600711.SH) seems to have turned a corner.

Year-on-year performance increased significantly

ST Shengtun disclosed its 2024 semi-annual report on August 12. The company achieved operating income of 11.414 billion yuan in the first half of the year, a year-on-year decline of 14.28%;Net profit attributable to parent company was RMB 1.118 billion, up 524.14% year-on-yearThe company said that the main reason for the performance change wasThe power battery industry continued to grow in the first half of the year and copper prices showed an upward trend.According to data released by the China Association of Automobile Manufacturers and the China Automotive Power Battery Industry Innovation Alliance in the first half of 2024, China's production and sales of new energy vehicles reached 4.929 million and 4.944 million respectively, up 30.1% and 32% year-on-year respectively; the cumulative installed capacity of power batteries was 203.3GWh, up 33.7% year-on-year.

Regarding the rise in copper prices, ST Shengtun said in its semi-annual report: Against the backdrop of loose overseas liquidity, expectations of tight copper mine supply have fermented, and the international LME copper price hit a record high of $11,104.5 per ton in May, up about 36% from the low of $8,127 per ton at the beginning of the year; after the subsequent correction, it is still at a historically high level. However,Both Shanghai copper and international copper have experienced significant corrections recently.Moreover, some institutions still hold a bearish view on the future trend of copper prices. According to a research report by CITIC Securities on August 8: Overall, the current market sentiment is relatively cautious, and the negative impact has not yet been fully resolved.The current copper price lacks a rebound driver, so the bearish outlook can still be maintained.Regarding whether the sharp drop in copper prices will have an adverse impact on the company's performance in the second half of the year, the staff of ST Shengtun Securities Department responded to investors:It is possible, but we have not received official financial data yet.”

ST Shengtun also stated that in the first half of the year, the company focused on promoting and completing the ramp-up and full production of 50,000 tons of copper in the Kalonwe project in the Democratic Republic of the Congo, as well as the trial production of the 20,000 tons of high-grade nickel matte production line in the first phase of the Guizhou New Materials Project, and comprehensively promoted the construction of the Dali Sanxin Copper Mine.In the first half of the year, the energy and metal business achieved revenue of 6.88 billion yuan and a gross profit margin of 31.32%.In the first half of the year, the companyThe output of copper products was 80,700 metal tons, the output of cobalt products was 8,000 metal tons, and the output of nickel products was 22,300 metal tons.

Big acquisitionsNickel Ore

ST Shengtun also announced on August 12 that the company's wholly-owned subsidiaryHongshengInternational Resources Co., Ltd. (hereinafter referred to as "Hongsheng International") intends to acquire Huawei Holdings held by Huayou Holdings (Hong Kong) Co., Ltd. (hereinafter referred to as "Huayou Holdings Hong Kong") in cash.Nickel IndustryCo., Ltd. (hereinafter referred to as “Huawei Nickel") 45%Equity, in order to indirectly acquire Youshan Nickel Indonesia Co., Ltd. (hereinafter referred to as “The consideration for this transaction is US$163 million.After the completion of this transaction, Hongsheng International will hold 100% of Huawei NickelEquity, indirectly holding a 65% stake in Youshan Nickel Industry.

According to the financial data disclosed in the announcement, Huawei Nickel IndustryIn 2023, the company will achieve operating income of 3.553 billion yuan and net profit attributable to the parent company of 307 million yuan.In the first quarter of this year, the company achieved operating income of 807 million yuan and a net profit of 57.3748 million yuan. Youshan Nickel will achieve operating income of 3.551 billion yuan and a net profit of 570 million yuan in 2023; in the first quarter of this year, the company achieved operating income of 807 million yuan and a net profit of 89.0664 million yuan.

The announcement shows that the Youshan Nickel Project is located in Central Hamahera County, North Maluku Province, Indonesia. The specific construction site is in Weda Bay Industrial Park (IWIP). The project site is adjacent to the provincial road and the nickel ore export terminal in the south. There are rich laterite nickel ore resources around the project. The Youshan Nickel Project purchases laterite nickel ore and processes it into RKEF process.Nickel IronOr low-grade nickel matte, nickel iron is supplied to the downstream stainless steel field, and low-grade nickel matte is supplied to the downstream power battery raw material field. The company's Guizhou new material project produces multiple products such as nickel sulfate by purchasing nickel sulfide concentrate, nickel iron, high-grade nickel matte, etc. Youshan Nickel Industry can form a synergistic effect with domestic multiple product production projects with nickel as the core, increase the self-sufficiency of raw materials, become one of the stable sources of raw materials for the Guizhou project, and further increase the company's new energy battery nickel material business territory.

Jiemian News found that this acquisition wasCash Acquisition, ST Shengtun's semi-annual report shows that as of June 30,The company's cash and cash equivalents balance at the end of the period was RMB 3.519 billion, and the company's owners' equity (or shareholders' equity) totaled 17.082 billion yuan. Why does the company have so much cash reserves in its account? Is the company's funds used reasonably? The staff of ST Shengtun's securities department replied to investors: "This company has its own plan, you have to trust the company’s strategic department.”

Dispose of stock-type trading financial assets at an appropriate time

ST Shengtun announced on the same day that the board of directors agreed that the company would dispose of all its holdings through the secondary market at an appropriate time.The number of shares disposed of by stock-based financial assets such as Xiamen Tungsten New Energy (688778.SH), Defu Technology (301511.SZ), and Pava Holdings (688184.SH) shall not exceed 3.4177 million shares, 3.6029 million shares, and 1.1507 million shares, respectively.According to statistics from Jiemian News, based on the closing prices of Xiamen Tungsten New Energy, Defu Technology, and Pawa Shares on August 12,ST Shengtun will cash out a total of 158 million yuan this time.ST Shengtun said that disposing of stock-type financial assets at the right time will help the company avoid investment risks in the securities market, recover investment funds, optimize the asset structure, and improve the company's asset liquidity and utilization efficiency.

In addition, ST Shengtun also issued an announcement on August 12 to change the chief financial officer and change the purpose of repurchased shares and cancel them. The company's board of directors recently receivedWritten resignation report from the company's financial director, director and vice president Weng Xiong.Due to job changes, Weng Xiong has applied to resign from the position of the company's financial director. After his resignation, Weng Xiong will continue to serve as the company's director and vice president.The board of directors agreed to appoint Zhou Hualin as the company's chief financial officerThe term of office is from the date of the adoption of the board resolution to the expiration of the 11th board of directors. Zhou Hualin's resume shows that he is also a director of Sichuan Yingda Lithium Battery New Materials Co., Ltd. and Sichuan Langsheng New Energy Technology Co., Ltd., and has served as the general manager of the company's finance department since June this year. He has been engaged in finance-related work since 2005.

It is worth noting thatST Shengtun was recently “capped” by the Shanghai Stock Exchange for having false statements in its financial statements for three consecutive years.From December 2021 to the first half of 2023, the company conducted sales of cobalt hydrometallurgical intermediates with relevant customers. When the goods were delivered to the relevant customers, the control rights were not actually transferred but the revenue was recognized, which led to errors in the company's financial data.The company and relevant responsible persons received a total fine of RMB 8.5 million from the Xiamen Securities Regulatory Bureau (Note: the resigned financial director, director, and vice president Weng Xiong was fined RMB 1.5 million)The company's stock was also subject to other risk warnings, i.e. ST, in accordance with the relevant provisions of the Shanghai Stock Exchange Stock Listing Rules (revised in April 2024). Regarding Weng Xiong's resignation and his replacement by Zhou Hualin, who has considerable financial work experience, the company responded to investors, saying: "The new CFO will definitely come to work with the intention of working hard and not making mistakes. It is impossible for him to come to work specifically to make mistakes."

At the same time, the company announced that based on the company's actual operating conditions, combined with future development strategies and the company's incentive scale, incentive effect and other factors, the company intends to change the purpose of the repurchased shares, changing the purpose of the repurchased shares of 32.0577 million shares from "for the implementation of employee stock ownership plans or equity incentives" to "Used to cancel and reduce the company's registered capitalThe company said that after the repurchased shares are cancelled, it will be beneficial to further improve financial indicators such as earnings per share and net assets per share.Improve the return on investment for the company's shareholders and further boost investor confidence.

On August 13, ST Shengtun's stock price opened 1.66% higher at 4.29 yuan per share. However, the company's stock fluctuated and weakened after the opening. As of the close, it fell 3.32% to 4.08 yuan per share.