Ganfeng Lithium(01772.HK)：3Q26 results miss; overseas self-owned lithium mines ramping up

机构：中金公司
研究员：Jiaming ZHANG/Ding QI/Yan CHEN

3Q26 results miss our expectations
Ganfeng Lithium announced its 3Q26 results: Revenue rose 109.0% YoY but fell 6.0% QoQ to Rmb13.06bn; net profit attributable to shareholders rose 35.6% YoY but fell 68.8% QoQ to Rmb755mn; and recurring attributable net profit turned positive YoY to Rmb790mn. The firm’s results missed our expectations due to declining lithium prices.
First, falling lithium prices squeezed profitability. The domestic lithium carbonate price fell 14.2% QoQ to Rmb148,023/t in 3Q26. The accelerating decline in lithium prices, coupled with elevated raw material inventory costs, squeezed margins in lithium salt refining. The firm's gross margin fell 12.5ppt QoQ to 20.2% in 3Q26.
Second, investment income from mining projects declined sharply. The firm's investment income from associates mainly came from lithium mining projects in which it holds stakes, including Mount Marion and Yiliping. Amid falling lithium prices and rising mining costs, investment income from associates declined 54.5% QoQ to Rmb200mn in 3Q26.
Third, asset impairment weighed on earnings. In 3Q26, the firm made provisions for asset impairment losses of Rmb60mn, mainly due to inventory impairment caused by falling lithium prices.
Trends to watch
Global lithium mining output ramping up; resource selfsufficiency ratio likely to rise further. We believe the firm's resource self-sufficiency ratio could increase from 32% in 2025 to 50% in 2027, as production from its lithium mining assets continues to ramp up.
First, the Mount Marion project in Australia is constructing a flotation plant and undertaking underground mining works. Upon completion of the upgrades, annual lithium concentrate capacity should increase to 600,000t. Second, Phase I of the Goulamina spodumene ore project in Mali, with annual lithium concentrate capacity of 506,000t, continues to ramp up, having produced 234,000t of lithium concentrate in 1H26. Third, the Bombali lithium mine in Africa targets annual mining and beneficiation capacity of 2mnt, and the firm expects capacity to begin ramping up in 2027.
Financials and valuation
Due to falling lithium prices, we cut our 2026 and 2027 attributable net profit forecasts 7.5% and 68.5% to Rmb4.46bn and Rmb1.84bn. A- and H-shares are trading at 18.5x and 10.4x 2026e P/E. As overseas self-owned lithium mines ramping up, we maintain OUTPERFORM ratings, but given falling lithium price expectations, we cut our A-share TP 50.8% to Rmb43.03 (20.2x 2026e P/E with 9.5% upside). We cut our H-share TP 65.5% to Rmb27.8 (11.3x 2026e P/E with 8.6% upside).
Risks
Sharper-than-expected decline in lithium salt prices; intensifying competition in batteries; risks related to overseas projects.