Dongwu Securities: Issue a Buy rating for Ganfeng Lithium Industry

Dongwu Securities Co., Ltd. recently conducted research on Ganfeng Lithium Co., Ltd. and published a research report titled “2025 Annual Report Review: Lithium Prices Rise + Equity Resource Volume Increases, Opening Up Profit Space,” granting Ganfeng Lithium a Buy rating.

Ganfeng Lithium(002460)

Investment Highlights

Performance is at the upper end of guidance, in line with expectations: The company’s FY25 revenue was RMB 23.1 billion, up 22% year over year; attributable net profit was RMB 1.61 billion, up 178% YoY; net profit after deducting non-recurring items was -RMB 390 million, up 57% YoY; gross margin was 15.7%, up 4.9 percentage points YoY; attributable net profit margin was 7%, up 18 percentage points YoY. The performance was at the upper end of the guidance, in line with expectations. Of this, Q4 revenue was RMB 8.46 billion, with quarter-on-quarter and year-over-year changes of 70%/35%; attributable net profit was RMB 1.59 billion, with quarter-on-quarter and year-over-year changes of -211%/185%; net profit after deducting non-recurring items was RMB 560 million, with quarter-on-quarter and year-over-year changes of 205%/2010%. Gross margin was 19.6%, with quarter-on-quarter and year-over-year changes of 7.5/3 percentage points. Non-recurring items mainly came from Q4 disposal of YiChu to generate investment income of RMB 1.35 billion; after excluding this impact, earnings continued to grow.

Lithium prices rising + improvement in equity resource volume, with large profit upside: In FY25, the company’s revenue from lithium products was RMB 12.9 billion, up 7% YoY, with gross margin of 15.5%, up 5 percentage points YoY. Shipment volume (LCE) was 185k tons, up 42% YoY, including about 60k tons in Q4, up 20% quarter over quarter. This corresponded to an FY25 tax-included average price of about RMB 79k/ton; the tax-included average price corresponding to Q4 was about RMB 90,000–100k/ton. We expect the company’s shipment volume (LCE) in 2026 to have the potential to reach 210,000+ tons, up 15% YoY. On the resource side, the company’s FY25 equity resources were 90,000–100k tons. In 2026, we expect it to reach 130,000–150k tons, including 75k tons LCE after the completion of the Marion technological upgrade; Cauchari-Olaroz salt lake output of 34.1 thousand tons in 2025 and a 35,000–40k ton guidance for 2026, with plans to build a second phase with 45k tons; Mariana, where we expect 17.0 thousand tons of capacity; Yiliping, 15.0 thousand tons of capacity; Goulamina produced 185k tons of concentrate in 2025 and has built 60k tons of capacity, with the potential to reach full production in 2026. Based on a lithium carbonate price of RMB 150k/ton in 2026, the resource-side profit contribution is expected to be around RMB 9.0 billion.

Battery business profitability improves, continuing to ramp up in the energy storage market: In FY25, the company’s battery business revenue was RMB 8.2 billion, up 40% YoY; gross margin was 14.6%, up 2.9 percentage points YoY. Of this, consumer battery revenue was RMB 2.2 billion; revenue from energy storage batteries was RMB 6.0 billion. Production was 27 GWh, sales were 17.8 GWh, implying an average price of RMB 0.38/wh. The year-end price recovered somewhat. For the full year, Ganfeng Lithium Battery generated profit of RMB 360 million, a significant improvement. We expect the company’s total battery production in 2026 to exceed 40 GWh. Profit per wh is expected to be RMB 0.02–0.03, which may contribute RMB 1.0 billion in profit.

Q4 operating net cash flow is impressive, with sufficient impairment provisions: In FY25, period expenses were RMB 3.93 billion, up 40% YoY; expense ratio was 17%, up 2.2 percentage points YoY. Of this, Q4 period expenses were RMB 1.15 billion, with quarter-on-quarter and year-over-year changes of 75%/18%, and the expense ratio was 13.6%, with quarter-on-quarter and year-over-year changes of 0.4/-2 percentage points. FY25 operating net cash flow was RMB 2.94 billion, down 43% YoY; of this, Q4 operating cash flow was RMB 3.37 billion, with quarter-on-quarter and year-over-year changes of 220%/-563%. FY25 capital expenditures were RMB 6.9 billion, down 25% YoY; of this, Q4 capital expenditures were RMB 1.54 billion, with quarter-on-quarter and year-over-year changes of -29%/52%. In Q4, impairment losses on assets were provided for in the amount of RMB 260 million.

Earnings forecast and investment rating: Based on the annual report performance, we expect the company’s attributable net profit in 2026–2027 to be RMB 9.3/11.2 billion (previous estimates were RMB 9.4/10.9 billion). We add an FY2028 attributable net profit forecast of RMB 12.6 billion, up 479%/20%/13% year over year. The corresponding PE is 18x/15x/13x. Maintain the “Buy” rating.

Risk Warning: Capacity release may fall short of expectations; demand may fall short of expectations; risk of volatility in lithium carbonate prices.

Latest earnings forecast details are as follows:

In the past 90 days, this stock has received ratings from 2 institutions in total, and 2 institutions gave a Buy rating.

The above content has been compiled by Securities Star from publicly available information and generated by an AI algorithm (Network Information Safety Filing No. 310104345710301240019). It does not constitute investment advice.