Macquarie raises target price for Ganfeng Lithium Group (01772) to HK$86 in response to increased lithium prices and profit forecasts.

Macquarie released a research report stating that Ganfeng Lithium Group (01772) had a net profit of 1.613 billion yuan last year, close to the upper limit of profit expectations. The net profit for the fourth quarter of last year reached 1.6 billion yuan, compared to a net loss of 1.4 billion yuan in the fourth quarter of 2024, mainly benefiting from the rise in lithium prices. The lithium price forecast has been adjusted, with an increase in the after-tax net profit forecast for Ganfeng Lithium Group in 2026 and 2027 by 8% and 9%, to 4.4 billion and 5 billion yuan, respectively, and an introduction of a forecast for 2028 of 5.6 billion yuan. The target price has been raised from HK$83.5 to HK$86, maintaining an "outperform" rating. The company plans to increase capital in its battery subsidiary to further expand downstream battery business. The bank believes that the battery business will be another driver of revenue and profit beyond lithium. Meanwhile, the bank expects lithium prices to be supported, mainly due to the Chinese government's promotion of energy storage system capacity pricing policies, which are expected to improve profitability and drive further construction of energy storage stations. In addition, supply disruptions in Jiangxi and Zimbabwe are tightening the supply.