Lygend Resources & Technology (2245) H2 2023 earnings summary

Executive summary

• Revenue rose 15.1% YoY to RMB21,059.3 million, while profit attributable to owners fell 39.4% to RMB1,051.4 million amid lower nickel prices, weaker margins and higher financing costs.

• HPAL Phase II and RKEF Phase I reached full production; hydrometallurgical output exceeded annual design capacity, while major Obi Island expansions continued.

Financial highlights

• Gross profit declined 24.7% YoY to RMB3,382.0 million; gross margin fell to 16.1% from 24.6%.

• Profit for the year decreased 43.1% to RMB1,721.5 million; profit attributable to owners declined 39.4% to RMB1,051.4 million.

• Profit before tax fell 44.7% to RMB1,761.5 million; profit margin declined to 8.2% from 16.6%.

• Finance costs rose to RMB534.9 million from RMB254.4 million, reflecting higher borrowings and interest rates; income tax expense fell to RMB40.0 million from RMB156.9 million.

• Basic and diluted EPS was RMB0.68, versus RMB1.30 in 2022.

Outlook and guidance

• Priorities include HPAL Phase III, RKEF Phase II and a planned electrodeposited cobalt project, with capacity expected to be released progressively as construction advances.

• R&D plans include new production techniques, broader product offerings, laterite nickel resource utilization, energy efficiency and carbon-emission reduction.

• Plans include expanding upstream nickel-ore channels and developing Obi Island power, water, port and airport infrastructure; photovoltaic generation is planned to increase green power use.