Advertisements

Solid growth prospect

  • Solid growth in market share and earnings outlook
  • Consumption disruption concern should be short-lived
  • Accelerating upstream expansion development to uplift margin outlook
  • Recommend re-entry with new TP of HK$230

Consumption disruption concern should be short-lived. We believe the market has mispriced GFLi surrounding concerns of consumption slowdown amid car chips shortage. However, we foresee that the new supply growth wouldn’t meet demand growth following a solid electric vehicle market growth. This continues to support lithium price uptrend which will be key driver GFLi’s earnings growth of 43% CAGR during 2021 to 2023. 

Advertisements

Solid market share expansion and earnings growth prospect. On GFLi’s new projects in Qinghai are smoothly developing, we expect it would support further market share expansion ahead. GFLi’s sales volume growth is estimated at a 25% CAGR during 2021 to 2023 after recording a 32% CAGR during 2019 to 2021. Also, GFLi’s ambitious upstream expansion would boost raw material self-sufficiency up to above 70% in 2024, from 30% in 2020. This will lift its margins without negative impact from supply shortage of lithium concentrate. 

Potential positive share price catalyst. GFLi’s plan to reveal its new contracts and projects development plan towards the year end would provide new share price catalyst.