Shares of Chinese lithium-salt giant Ganfeng surge as EV demand, tight supply drive nearly tenfold profit jump
- The producer of lithium salts, used in lithium-ion batteries, posted a 955 per cent increase in net profit for the year’s first three months
- Prices for the compounds started a mild retreat early this month after increasing fourfold since September, but Ganfeng has further room for profit growth, analysts said
Shares of Ganfeng Lithium, the world’s third largest and China’s largest producer of lithium salts, gained 12.5 per cent after it posted a nearly tenfold jump in quarterly profit.
The company posted late on Tuesday a net profit of 3.1 billion yuan (US$473 million) for the year’s first three months, up from 293.7 million yuan in the same period last year. Revenue grew 233 per cent to 5.36 billion yuan.
“The change [in revenue] was due mainly to the increase in the price and volume of the lithium salt products,” chairman Li Liangbin of the Jiangxi province-based firm said in a filing to Hong Kong’s bourse.
Operating profit margin of the Hong Kong and Shenzhen-listed firm jumped to 66 per cent from 31 per cent in the year-earlier period, as revenue grew twice as fast as operating costs.
Ganfeng shares surged as much as 14.5 per cent on Wednesday before closing 12.5 per cent higher at HK$92.25. Even so, it has fallen by half from the record high of HK$185 seen last September.
Prices for Chinese lithium carbonate and lithium hydroxide, the main compounds used to make lithium-ion batteries found in electric cars and other electronic appliances, have jumped around fourfold since last September. Demand – especially from makers of electric vehicles – surged while supply remained tight due to lagging production expansion.