Ganfeng Lithium Shares Fall After Profit Dives 98%

By Jiahui Huang

Ganfeng Lithium shares fell after quarterly profit sank on waning demand and higher costs.

Hong Kong-listed shares of the Chinese lithium specialist were down 14% to 27.60 Hong Kong dollars (US$3.53) late Tuesday, on track for their biggest one-day percentage drop since April 2022. Shenzhen-listed shares closed 3.2% lower at CNY44.28.

The Xinyu, China-based company said earlier that third-quarter profit fell 98% from a year ago, with revenue sliding 43% to CNY7.54 billion.

Nomura analysts in a research note attributed the weak sales to lower lithium prices and highlighted a contraction in gross profit margin, "likely owing to higher inventory cost for [lithium ore] spodumene."

"Despite lower spot prices for feedstock, we believe Ganfeng still faced sluggish downstream demand on industry destocking, as well as elevated inventory cost, squeezing its profitability" in the quarter, Nomura analysts Ethan Zhang, Bing Duan and Joel Ying said.

They expect the company's results to improve sequentially in the fourth quarter, helped by stabilizing lithium-carbonate prices and lower spodumene prices that should improve feedstock costs.

Nomura kept a neutral rating and a CNY69.00 target price on Ganfeng Lithium's China-listed stock, but said that forecast numbers are under review.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

October 31, 2023 04:16 ET (08:16 GMT)

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