HAITONG INT'L: Gives Ganfeng Lithium Group (01772) an "outperform" rating with a target price of 40.36 Hong Kong dollars.

HAITONG INT'L has released a research report stating that considering the industry's profit turning point is evident, Ganfeng Lithium Group (01772) maintains its leading position in the industry, with a simultaneous development of multiple business aspects. The company is given a 25-year 1.8 times PB valuation, corresponding to a target price of HK$40.36, with an outperforming rating compared to the market. Key points from HAITONG INT'L include: Operating performance in the first half of 2025 In the first half of 2025, the company achieved operating income of 8.258 billion yuan, a year-on-year decrease of 13.82%, and a net loss of 536 million yuan, a decrease of 223 million yuan compared to the previous year. The comprehensive gross profit margin was 10.78%, a decrease of 0.38 percentage points compared to the previous year. The net losses in the first and second quarters of 2025 were 356 million yuan and 180 million yuan respectively, with a decrease of 175 million yuan in Q2. In the first half of 2025, the global lithium salt industry experienced a deep adjustment, with the main reasons for the losses in the first half of the year being the changes in the supply and demand structure and the fluctuations in lithium product market prices. Lithium carbonate prices hit bottom and rebound, boosting profitability in the second half of the year According to data from Atlantean, the price of battery-grade lithium carbonate was around 76,000 yuan per ton at the beginning of 2025, but it continued to decline in the first half of the year, reaching a low of around 60,000 yuan per ton at the end of June, which was the main reason for the company's poor profitability in the first half of the year. In the second half of the year, with the promotion of "anti-internecine" policies in China, the price of lithium carbonate hit bottom and rebounded, reaching a high of 86,000 yuan per ton in August, and the latest price in September was 72,500 yuan per ton. The bank believes that the current lithium carbonate prices have passed the lowest point, and with the steady growth of new energy vehicles and the continuous outbreak of energy storage, the demand for lithium carbonate is still expanding. The supply side optimization pattern brought about by "anti-internecine'' policies in China will improve the supply and demand situation, and it is expected that the profitability of the company's related businesses in the second half of the year will be restored. Progress in new projects, enhancing overall competitiveness For lithium spodumene, the company's Mali Goulamina lithium project phase one has officially started production, and the company is actively accelerating the progress of capacity ramp-up for this project. In terms of salt lake brine, the company's Cauchari-Olaroz salt lake project in Argentina is in the process of stabilizing capacity ramp-up. The project's lithium carbonate designed capacity is 40,000 tons per year. The phase one of the Mariana project in Argentina also started production in early 2025, with a designed lithium hydroxide capacity of 20,000 tons per year. Accelerated development of lithium batteries and energy storage, with leading research and development in solid-state In terms of lithium batteries, the company's business covers over 20 types of products, including solid-state lithium batteries, power batteries, consumer batteries, polymer lithium batteries, energy storage batteries, and energy storage systems. In terms of solid-state batteries, the company has a complete integrated layout upstream and downstream of solid-state batteries, and commercialization capabilities. The company has research and production capabilities in key areas of solid-state batteries, such as sulfide electrolytes and raw materials, oxide electrolytes, lithium metal negative electrodes, battery cores, and battery systems. Risk warnings: fluctuations in lithium and lithium product prices, project progress falling short of expectations, asset impairment risks.