Net profit grew by more than 195 timeswhere is the valuation support for Ganfeng Lithium Group (01772) as it keeps hitting new lows?

A "blowout" third-quarter report why hasn't it translated into a "positive feedback" for the share price? It is understood that on October 15, Ganfeng Lithium Group (01772) released its 2026 third-quarter report. In the first three quarters, it achieved operating revenue of 36.159 billion yuan, up 147.24% year on year, and net profit attributable to shareholders of 5.012 billion yuan, up as much as 195.4 times year on year. Yet the blowout results did not lift the share price instead it fell. On the next trading day, the stock dropped rapidly after the open and closed down more than 6%, and since May this year its market capitalization has shrunk by more than 70%. The sharp earnings growth in the first three quarters was attributed to a recovery in selling prices of lithium series products and higher sales volumes of lithium battery series products. But in the third quarter, lithium carbonate prices fell more than 20%; the company's revenue and net profit attributable to shareholders were 13.275 billion yuan and 754 million yuan respectively, both down quarter on quarter, with net profit plunging nearly 70% QoQ. As of now, lithium carbonate prices have fallen nearly 20% in the fourth quarter, so the company's next-quarter results are also unlikely to be optimistic. Nevertheless, as the world's largest producer of lithium metal and the largest domestic supplier of lithium compounds, Ganfeng Lithium Group spans lithium resource development, deep processing of lithium salts and lithium metal smelting, and lithium battery manufacturing and recycling a complete chain from mine to battery making its performance the most resilient in this round of price pulses. Its dynamic PE valuation has also retreated to around 6 times. As lithium carbonate prices keep falling, where is the support? Lithium carbonate as the valuation anchor; lithium battery earnings gush in the first three quarters It is understood that lithium carbonate prices are the valuation anchor for the lithium battery sector. In the second half of 2025, lithium carbonate began an upswing, which continued to surge in 2026, hitting a year-high of 200,000 yuan/ton in mid-May, more than tripling from the low of 59,000 yuan in June 2025, and driving both earnings and valuations in the lithium battery sector to double. After June, lithium carbonate prices kept falling; as of now they have halved from the peak and broken below the 100,000 mark, and the lithium battery sector has pulled back in tandem, with market cap declines generally exceeding 50%. Although lithium carbonate prices fell sharply in the second half, they were still up considerably year on year, which became the price basis for the collective earnings turnaround of lithium companies. According to the third-quarter forecasts of major lithium battery companies, all were raking in profits. Lithium battery industry chain earnings gushed. From October 12 to 15, Shenzhen Capchem Technology, Qinghai Yanhu Industry, Yunnan Energy New Material, Guangdong Jiayuan Technology, Eve Energy Co.,Ltd. and Ganfeng Lithium Group successively disclosed their first-three-quarter earnings forecasts. From upstream lithium salts to midstream materials and downstream batteries, profits rose almost across the board. Among them, the biggest earner in the first three quarters was Qinghai Yanhu Industry, with net profit attributable to shareholders of 8.84-9.05 billion yuan, up 87.96%-92.42%; the fastest grower was Ganfeng Lithium Group, up as much as 195.4 times. They all earn money from the same cycle, but the "way" of earning differs. Qinghai Yanhu Industry runs a "potash fertilizer + salt-lake lithium extraction" dual-wheel model; Tianqi Lithium Corporation takes "resources are king" to the extreme, relying on the Greenbushes mine and SQM equity income, with revenue basically from lithium ore and lithium products, giving it the greatest elasticity when prices rise; Ganfeng Lithium Group is a thorough "full-industry-chain player," with lithium metal and lithium compounds accounting for more than 60%, but also with an extra battery curve accounting for more than 30%. Thus it can be seen that in the third quarter, Ganfeng's single-quarter net profit fell nearly 70% from the second quarter; Tianqi has not published third-quarter results but is expected to decline even more; while Yanhu fell about 10% QoQ. The transmission of the lithium price pullback from the May peak had a greater impact on the statements of the two resource-based companies, Ganfeng and Tianqi. But for the capital market, this table only answers "how much was earned this time," while structure and profit margins determine "how long it can keep earning." The market's pricing logic for lithium battery companies is switching from "elasticity" to "sustainability." As a player with a full-industry-chain layout, can Ganfeng Lithium Group withstand this valuation test brought by the lithium carbonate correction? Valuation logic may "shift"; Ganfeng falls into the "allocation zone" Ganfeng Lithium Group has a complete lithium ecosystem. Starting from midstream lithium compounds and lithium metal manufacturing, it has successfully expanded upstream and downstream along the industry value chain. On the resource side, the company has laid out the world's core lithium resource belts, including two spodumene projects in Australia and multiple high-quality lithium salt lake assets in Argentina; on the manufacturing side, its lithium compound and lithium metal production bases cover Fengxin and Yichun in Jiangxi and Dazhou in Sichuan, while its lithium battery business has laid out power battery, energy storage battery, consumer battery and PACK system production lines in Xinyu (Jiangxi), Chongqing and Inner Mongolia. The company has formed a vertically integrated business model, with products covering battery-grade lithium carbonate, battery-grade lithium hydroxide, lithium metal, solid-state batteries and more, widely used in electric vehicles, energy storage, aerospace, functional materials and pharmaceuticals. Its industry chain layout and diversified products give its performance growth resilience. In terms of revenue structure, the company has formed a dual-wheel drive pattern of lithium products and lithium batteries. Lithium series products have always been the company's largest revenue source. From 2019 to 2025, revenue from this business grew from 4.161 billion yuan to 12.876 billion yuan, while the lithium battery and materials business grew even faster, climbing rapidly from 603 million yuan to 8.234 billion yuan, with its revenue share continuing to rise. In the first half of 2026, the two product series accounted for 63.2% and 35.3% of revenue respectively, while the company's lithium ore resource products accounted for 1.5%. In the first three quarters of 2026, the two core businesses continued to drive strong earnings growth, with revenue doubling, net profit attributable to shareholders of 5.012 billion yuan, and non-recurring net profit of 4.636 billion yuan, up 592.14% year on year a "scale" solid enough after excluding one-off gains and losses. In addition, the financial side is sound, with an asset-liability ratio of 54.91%, continued net operating cash inflow, and net cash flow of 2.295 billion yuan, up 634.77% year on year. As of September, the company had 8.96 billion yuan in cash and cash equivalents. It is worth noting that the company is advancing its industry chain vertically. On the lithium battery side, in the first half the company's energy storage cells continued to run at full capacity, with capacity utilization close to 100%; construction of its self-developed 588Ah large-cell production line has begun commissioning and trial production, with capacity ramp-up officially scheduled to start in the third quarter of 2026. In the second half of 2026, falling lithium carbonate prices will squeeze the profit margins of lithium salt products, but the self-supply rate will rise substantially. If upstream prices continue to pull back, it is expected to increase the share of lithium battery investment and raise the revenue contribution of lithium batteries. Back to the capital market: Ganfeng Lithium Group's Hong Kong market capitalization has fallen 74% from its May peak, but is still up 64% from last year's starting low. The sharp valuation pullback is not an isolated case the entire lithium battery sector has fallen just as sharply. On valuation, the company's PB is 0.9 times and dynamic PE 6.5 times, versus 3 times and 23 times for the lithium battery sector, respectively. Clearly the company's valuation has fallen into the "allocation zone." However, Ganfeng's valuation coordinate system is shifting from "cyclical stock" to "growth stock," and the commercialization pace and profit closed loop of its lithium batteries, especially solid-state batteries, have become the core variables for valuation. From the perspective of investment banks, most are pessimistic, mainly worried about continued lithium carbonate price corrections. For example, a UOB Kay Hian research report said futures contracts had nearly halved since early September 2026 from the mid-May high of more than 200,000 yuan per ton, mainly due to market expectations of increased supply; it cut its average selling price assumptions for Ganfeng Lithium Group and sharply lowered its target price from HK$75 to HK$28. But there are also optimists: for example, a Huatai research report is bullish on the company's energy storage capacity expansion advancing alongside product iteration and on progress in solid-state battery commercialization, maintaining an "Overweight" rating. Overall, this year's first-half lithium carbonate upcycle brought huge wealth to the lithium battery industry, with earnings and valuations surging in succession, but the third-quarter price decline also caused industry profits to fall QoQ and valuations to shrink sharply. As an industry leader, Ganfeng Lithium Group has a full-industry-chain layout and dual-wheel drive of lithium products + lithium batteries, while its integrated cost depth and the long-term imagination opened up by solid-state batteries provide strong support for the current valuation bottom. Lithium carbonate prices will continue to affect valuation swings in the lithium battery sector. If the company's valuation driver shifts from "cyclical stock" to "growth stock," the valuation bottom may be a left-side opportunity.