- BUY Entry – 118 Target – 140 Stop Loss – 108
- GANFENG LITHIUM CO., LTD. is a China-based company principally engaged in the research, development, production and sales of deeply processed lithium products. The Company’s main products include lithium compounds, lithium metal and lithium batteries. The Company’s products are mainly used in electrical vehicles, chemicals and pharmaceuticals. The Company distributes its products in the domestic market and to overseas markets.
- Lithium carbonate reached another record high. Lithium carbonate prices in China rose to RMB358,500/tonne as of 25th January due to high global demand and tight supplies. Prices have jumped more than 25% YTD. China is expected to double the EV sales in 2022 to more than 5mn units. Meanwhile, battery producers rush to secure long-term supply contracts with lithium mining companies.
Lithium carbonate prices in China reached another record high (RMB/tonne)
- Positive FY21 earnings alert. The company announced the FY21 earnings alert. Net profit attributable to shareholders of the company jumped by between 368.45% and 436.76% YoY to between RMB4.8bn to RMB5.5bn. Net profit after deduction of non-recurring gains and losses jumped by between 621% and 795.04% YoY to between RMB2.9bn and RMB3.6bn.
- Technical breakout from the recent consolidation base. Share price has corrected by 41% from the peak of HK$185 in August 2021 to the low of HK$109 in December 2021. Driven by the positive earnings guidance, shares just broke out the consolidation of around HK$115 amidst the overall market downturn.
- Updated market consensus of the EPS growth in FY22/23 is 67.1%/20.6% YoY respectively, which translates to 23.6x/19.6x forward PE. Current PER is 44.3x. Bloomberg consensus average 12-month target price is HK$203.37.
