1QFY22 results beat expectations
1QFY22 net earnings beat expectations. GFLi’s reported revenue/net earnings jumped 233%/956% for 1QFY22. The growth was attributed to higher ASP and sales volume achieved in the period. The sales volume is better than the market’s expectation, at 15,000 tonnes LCE or 15% of our full-year assumption (1QFY21: c.15%), despite disruptions amid lockdowns in Shanghai since March. Also, the rising contribution from joint ventures, of RMB444m (1QFY21: loss), was a positive development.
Supportive sales and GP outlook. Based on our channel check, we expect the sales momentum that deteriorated into April to recover, as industry inventory continues to peak out. In view of the gradual resumption of downstream production, we believe the overall market sentiment would pick up going ahead. Our latest earnings estimate represents a faster CAGR of 62%, from 20% prior, during 2021-2023.
Overseas overhang. Despite potential mining law reviews in Chile and Mexico, management is confident the company’s acceleration of local mine expansion would bode well for its mid-term growth.