Ganfeng’s Strong Preliminary Q3 Results Reinforce Our Positive View; HKD 75 FVE Maintained

Narrow-moat Ganfeng reported stronger-than-expected preliminary third-quarter results with the midpoint of the first nine months of net profit accounting for 89% of our full-year profit forecast and 74% of PitchBook consensus. Significant profit growth was mainly due to robust demand for lithium compounds for new energy vehicles. We maintain our fair value estimate at HKD 75 (CNY 66), which implies a 2023 price/earnings ratio of 5.2 times. At the current price, the H-shares are trading at a 29% discount to our fair value estimate, which we think is attractive. The A-shares, at a 37% premium to its H-shares, are fairly valued.