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On Friday, Citi analysts recognized a shopping for alternative in Ganfeng Lithium, an organization that has been considerably impacted by the current plunge in lithium costs. Lithium, a key element within the manufacturing of electrical car batteries, has seen its worth drop by over 80% from its peak in 2022. This decline has affected Ganfeng Lithium’s OTC share worth, which has fallen by half over the previous 12 months.
Citi has responded to the lower in share worth by upgrading Ganfeng Lithium’s funding ranking from ‘promote’ to ‘purchase’. Alongside the improve, Citi has additionally elevated the 12-month worth goal for the corporate’s A shares to RMB44.90, up from RMB41.90. The A shares of Ganfeng Lithium closed on Thursday at RMB36.09.
The financial institution’s optimistic stance is predicated on Ganfeng Lithium’s means to navigate the downturn in lithium costs. In accordance with Citi, the corporate has managed to devour or write off most of its high-cost stock, which incorporates uncooked supplies, work in progress (WIP), and ultimate merchandise, in the course of the second to fourth quarters of 2023. This, Citi believes, alerts that Ganfeng Lithium’s monetary efficiency could also be approaching its lowest level.
Citi additionally hinted at a possible improve in battery demand and manufacturing, anticipating a surge beginning in March. This expectation is predicated on the prediction that the battery provide chain might expertise a re-stocking section within the coming weeks.
To capitalize on the potential development, Citi has launched a 30-day upside Catalyst Look ahead to each the A-share and H-share of Ganfeng Lithium. This transfer means that the financial institution sees a short-term development alternative within the firm’s inventory.
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