Ganfeng’s Strong Q3 As Guided; Retain Positive View and HKD 75/CNY 66 FVE

Narrow-moat Ganfeng reported strong third-quarter net profit, up six times year over year, at the midpoint of the company’s preliminary announcement. First nine months revenue and net profit accounted for 85% and 89% of our full-year forecast, respectively. Significant profit growth was mainly underpinned by record lithium prices due to robust demand for lithium compounds from new energy vehicles. We maintain our fair value estimate at HKD 75 (CNY 66), which implies a 2023 price/earnings ratio of 5.2 times. At the current price, the H-shares are trading at 30% discount to our fair value, which we think is attractive. The A-shares, at a 37% premium to its H-shares, are fairly valued.