The asset impairment loss expanded by 40 times, and Ganfeng Lithium's net profit fell by nearly 60% in the first three quarters

Interface News Reporter | Wang Yong

Affected by the decline in the price of lithium products, the performance of Ganfeng Lithium (002460.SZ/1772.HK), the global lithium salt leader, has declined sharply.

On the evening of October 30, Ganfeng Lithium released its third quarterly report, with operating income of 25.682 billion yuan in the first three quarters, down 6.99% year-on-year, and net profit of 6.01 billion yuan, down 59.38% year-on-year.

Among them, the revenue and net profit in the third quarter were 7.537 billion yuan and 160 million yuan respectively, down 42.77% and 97.88% year-on-year respectively, and down 13.4% and 95.4% month-on-month.

Judging from the specific data of the income statement, Ganfeng Lithium's operating costs in the first three quarters rose by more than 70% year-on-year, reaching 21.2 billion yuan. The company said that the main reason is that the cost of raw materials at the beginning of the period is relatively high, resulting in the relatively high cost of products in the current period.

In addition, the company's asset impairment loss expanded by about 40 times year-on-year, reaching a loss of 952 million yuan. Ganfeng Lithium pointed out that it was mainly due to the cyclical impact of the lithium industry and the provision for inventory price decline due to the impairment test of inventory.

Since the beginning of this year, lithium prices have shown a downward trend as a whole. According to Shanghai Ganglian data, as of the end of September, the average price of battery-grade lithium carbonate was 178,500 yuan/ton, down more than 40% from 315,000 yuan/ton in early July, and down about 65.5% from the beginning of the year.

Huatai Securities analysis pointed out that in addition to the negative impact of the decline in lithium salt prices on the performance of Ganfeng Lithium, the decline in upstream lithium concentrate prices also directly led to a significant year-on-year decline in the company's investment income in associates and joint ventures, mainly reflected in the Mt. Marion Australian lithium project. Lithium concentrate is the upstream raw material for lithium salts such as lithium carbonate.

In addition, the stock price of Pilbara, an overseas company in which Ganfeng Lithium has a stake, fell, resulting in a decrease in net income from fair value changes from 1.047 billion yuan in the second quarter to -550 million yuan in the third quarter, which also had a greater negative impact on Ganfeng Lithium's net profit.

As a global leader in the lithium industry, Ganfeng Lithium started from the manufacturing of lithium compounds and metal in the midstream, and its business has run through the development of upstream lithium resources, the deep processing of lithium salts in the midstream and the smelting of lithium metals, the manufacturing of downstream lithium batteries and the comprehensive recycling of retired lithium batteries.

Judging from the latest actions, Ganfeng Lithium is making efforts to lay out the downstream. On the same day as the release of the third quarterly report, Ganfeng Lithium announced that it agreed that its subsidiary Ganfeng Lithium signed an agreement with the People's Government of Nanchang Xinjian District to invest in the construction of a lithium battery production base project in the new economic development zone of Nanchang City.

The project is constructed in three phases, of which the first phase will build an annual output of 5 GWh energy storage PACK battery production base, with a planned investment of no more than 2 billion yuan;

In addition to Ganfeng Lithium, the performance of many lithium mines and lithium salt enterprises was affected by market prices, and their performance declined in the third quarter.

Tianqi Lithium, which is also the global leader in the lithium industry, achieved operating income of 8.576 billion yuan in the third quarter, a year-on-year decrease of 17.14%, and a net profit of 1.646 billion yuan.70.89% year-on-year decrease。

Rongjie Co., Ltd. (002192.SZ) revenue in the third quarter was 203 million yuan, down 70.8% year-on-year, and net profit was 55.6746 million yuan, down 91.8% year-on-year.

Shengxin Lithium Energy (002240.SZ) had revenue of 1.87 billion yuan in the third quarter, down 37.77% year-on-year, and net profit of 483 million yuan, down 63.68% year-on-year.

For the lithium market in the fourth quarter, Huatai Securities believes that there may be a phased rebound next, but the downward cycle has not yet ended. The agency estimates that the carbonated producers of purchased ore have continued to lose money since August, and the willingness of lithium salt plants to reduce production has gradually increased.

According to statistics from Shanghai Nonferrous Metals Network (SMM), lithium carbonate production fell by 7.3% month-on-month in September.

On the demand side, there is also no room for optimism. Huatai Securities pointed out that the downstream demand side has not yet seen a significant improvement. In September, there was a phased replenishment of the downstream, and the price of lithium in the fourth quarter may rebound in stages due to the upstream production reduction and downstream replenishment, but there is no reversal, and the price may still return to the weak range after the downstream replenishment is over.

As of 10:50 on October 31, Ganfeng Lithium's share price fell 5.38% to 43.27 yuan, with a market value of 87.3 billion yuan.