Morgan Stanley: Ganfeng Lithium 1Q26 Beats Expectations; Low-Cost Inventory Advantage Persists in Lithium Upcycle

Morgan Stanley reports that Ganfeng Lithium delivered first-quarter 2026 net profit of RMB 16.0–21.0 billion, a sharp swing from a RMB 3.56 billion loss in 1Q25. Recurring net profit reached RMB 12.5–17.5 billion, up from a RMB 2.42 billion loss in the prior-year period and RMB 0.557 billion in 4Q25. The main non-recurring item was a fair-value gain of roughly RMB 259 million from rising Pilbara Minerals shares. Management attributed the robust results to significantly higher lithium prices year over year, lower costs from increased self-owned mine output, and growing battery-segment shipments. Morgan Stanley expects these favorable factors to persist throughout 2026, with low-cost inventory and raw materials providing additional upside. However, tightening diesel supply in Australia and Africa poses a risk; if Strait of Hormuz traffic does not normalize quickly, higher fuel costs could squeeze margins and disrupt mine production. The bank maintains an Equal-weight rating on the A-shares with a target price of RMB 68.50 versus a current price of RMB 85.60, implying roughly 20 percent downside. EPS estimates for 2026 and 2027 stand at RMB 2.23 and RMB 2.43, respectively. The industry view remains Attractive.