GEM Co Ltd: Risk Reward Update

Research evidence excerpt

GEM Co Ltd: Risk Reward Update

UpdateM

Risk Reward – GEM Co Ltd (002340.SZ)

KEY EARNINGS INPUTS

Drivers Dec 2025 Dec 2026e Dec 2027e Dec 2028e

CoSO4 price (Rmb'000/t, inclu. VAT)

65 97 98 65

(Rmb, 000s)

NiSO4 price (Rmb/t, VAT incl.) (Rmb) 27,477 28,508 28,191 28,837

NCM precursor sale volume 149,790.0 170,000.0 190,000.0 210,000.0

Precursor processing fee (Rmb/t)

10,000 10,000 11,000 11,000

(Rmb)

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

Nickel and cobalt price RISKS TO UPSIDE FY Dec 2026e

Global EV penetration, which directly reflects Higher-than-expected cobalt and nickel prices,

demand for NCM precursor driven by stronger-than-expected demand 0.4

EV battery recycling, which enables the Rising sales volume of NCM precursor EPS Note: There are not sufficient brokers supplying

company to source nickel and cobalt at cheaper Better-than-expected production volume at (Rmb) consensus data for this metric

costs upstream nickel projects

Lower NCM cost on self-recycled raw materials

GLOBAL REVENUE EXPOSURE RISKS TO DOWNSIDE 7,314

EBITDA

Lower-than-expected cobalt and nickel prices (Rmb, mn) Note: There are not sufficient brokers supplying 0-10% Japan

Precursor sales volume misses on weaker-than- consensus data for this metric

APAC, ex Japan, Mainland 10-20% China and India expected demand

70-80% Mainland China Slow-than-expected progress at upstream

nickel projects 2,154

Net income

Source: Morgan Stanley Research Estimate (Rmb, mn) Note: There are not sufficient brokers supplyingView explanation of regional hierarchies here OWNERSHIP POSITIONING consensus data for this metric

Inst. Owners, % Active 89.6%

MS ALPHA MODELS

Source: Refinitiv, Morgan Stanley Research 10.1

ROE

4/5 3 Month Note: There are not sufficient brokers supplying