Ganfeng Lithium announced its annual report for the year 23. The company achieved revenue of 32.97 billion yuan in 2023, a decrease of 21.2%; net profit to mother was 4.95 billion yuan, a decrease of 75.9%. The company's revenue for the fourth quarter of '23 was 7.29 billion yuan, down 48.7%; net profit loss to mother was 1.06 billion yuan. Due to the drop in lithium salt prices, the company's performance is under pressure. The company plans to distribute a cash dividend of 8 yuan for every 10 shares to all shareholders.

World-leading lithium salt production capacity, achieving vertical business integration. The company is the world's leading lithium ecological enterprise. It is the only company in the global lithium industry that also has the industrialization technology of “lithium extraction from brine”, “lithium ore extraction”, and “lithium recycling”. It has the production capacity of more than 40 types of lithium compounds and lithium metal products in five categories, and is one of the manufacturers with the most complete supply of lithium series products. The company's business covers upstream lithium resource development, midstream lithium salt deep processing and lithium metal smelting, downstream lithium battery manufacturing and comprehensive recycling of decommissioned lithium batteries. Various business segments effectively exert synergy effects to improve operational efficiency and profitability. In 2023, the company produced 0.1043 million tons of LCE lithium series products, an increase of 7.3%, and sales of 0.1018 million tons of LCE, an increase of 4.6%, achieving a lithium business revenue of 24.465 billion yuan and a sales price of 0.24 million yuan/ton. By the end of 2023, the company's lithium salt inventory was 7240 tons of LCE, an increase of 50.8%.

High-quality lithium resources create a stable, low-cost source of raw materials. The company currently has 15 shares in lithium resources, covering various resource forms such as spodumene, lithium salt lake, lepidomite, and lithium clay. As of the end of 2023, the company held 48.04 million tons of LCE lithium equity resources. Currently, Marion spodumene, Cauchari-Olaroz salt lake, Pilgangoora tantalum-lithium mine, Yiliping salt lake, and Mengjin mining are lithium production resources. The company is advancing the construction of the Goulamina spodumene mine and Mariana salt lake. The company expects the Goulamina project to be put into operation in 2024, and the Mariana project will produce the first batch of products by the end of 2024.

The lithium battery business gradually grew to a high level of performance. The company's lithium battery business has covered more than 20 kinds of products in five categories, including solid-state lithium batteries, power batteries, consumer batteries, polymer lithium batteries, energy storage batteries, and energy storage systems, and has applied solid-state technology to help vehicle companies, battery manufacturers, and consumer brands complete energy iteration. In 2023, the first phase of the company's solid state battery production base in Chongqing was capped, and solid state battery packs were delivered; more than 100 large-scale energy storage projects were delivered, with a total application scale of over 11,000 MWh. In 2023, the company produced 10.6 GWh of power storage batteries, an increase of 56.5%, and sales of 8.2 GWh, an increase of 20.4%. The company produced only 0.28 billion consumer electronics batteries, an increase of 71.5%, and sold only 0.28 billion, an increase of 53.8%.

Profit forecasting and ratings. Ganfeng Lithium is a leading enterprise in the lithium industry. It has extensive resource reserves. The company has ensured the safe supply of raw materials and reduced costs through its own mines and lithium concentrate cooperation. We expect the company's 2024-2026 EPS to be 1.69, 2.27, and 2.88 yuan/share. Considering the competitive advantage brought by the company's leading enterprise status, we will give the company 26 times PE in 2024, corresponding to a target price of 43.94 yuan/share, maintaining a “superior to market” rating.

Risk warning. The price of lithium carbonate continues to fall. The company's overseas lithium resource project construction progress fell short of expectations.