UBS: Ganfeng Lithium's Q3 net profit misses expectations, negative market reaction anticipated

UBS issued a report stating that Ganfeng Lithium announced results for the first nine months of 2026, with net profit of RMB 5.012 billion, reaching 65% of the bank's full-year 2026 forecast. Third-quarter net profit was RMB 755 million, up 36% year-on-year and down 69% quarter-on-quarter, below both the bank's and market expectations. The bank noted that the earnings miss was mainly due to the decline in lithium carbonate prices in the third quarter, which was mismatched with the lagged cost of higher-priced spodumene inventory, estimated to have caused a loss of about RMB 630 million, explaining most of the gap versus market expectations; in addition, investment income fell quarter-on-quarter, mainly due to weaker profits at associate company Mt Marion, the higher base from the Pilbara sale gain in the second quarter, and seasonal factors. On the analyst call, the company said its outlook was broadly unchanged, expansion plans remain on schedule, and capital expenditure is expected to increase next year, with the extent depending on PPG financing and the scope of the Mariana upgrade. Management believes lithium carbonate prices are near a bottom, with risks skewed to the upside. The bank expects investors to react negatively to the third-quarter results, and maintains its "Buy" rating and target price of HK$44.28.