UBS: Ganfeng Lithium Group (01772) Q3 results miss expectations; market reaction expected to be negative

UBS issued a research report stating that Ganfeng Lithium Group's (01772) third-quarter results missed both the bank's and market expectations, and it expects investors to react negatively to the Q3 results. It maintains a "Buy" rating and a target price of HK$44.28. Ganfeng Lithium Group reported results for the first nine months of 2026, with net profit of RMB 5.012 billion, reaching 65% of the bank's full-year 2026 forecast; third-quarter net profit was RMB 755 million, up 36% year-on-year but down 69% quarter-on-quarter, below both the bank's and market expectations. The bank noted that the earnings miss was mainly due to the decline in lithium carbonate selling prices in Q3, which was mismatched with the lagging cost of higher-priced spodumene inventory, estimated to have caused a loss of approximately RMB 630 million, explaining most of the gap versus market expectations; in addition, investment income fell quarter-on-quarter, mainly due to weaker profits at associate Mt Marion, a higher base from the Q2 Pilbara disposal gain, and seasonal factors. On the analyst call, the company said its outlook was broadly unchanged, expansion plans remain on schedule, and capital expenditure is expected to increase next year, with the extent depending on PPG financing and the scope of the Mariana upgrade. Management believes lithium carbonate prices are near a bottom, with risks skewed to the upside.