FAST NEWS: Ganfeng Lithium to acquire 33.3% of EV company
The latest: Lithium miner Ganfeng Lithium Group Co. Ltd. (1772.HK; 002460.SZ) announced Monday that it will acquire 33.33% of Chongqing Ruichi Automobile for 1 billion yuan ($137 million).
Looking up: Ruichi focuses on electric commercial vehicles, and recorded a net profit of 24.93 million yuan in the first seven months of this year. Ganfeng’s 1 billion yuan investment will help expand its business.
Take Note: Ganfeng had 10.1 billion yuan in cash and cash equivalents at the end of June. That means the transaction will consume about 10% of its cash, though the company said it does not expect the investment to significantly affect its financial position.
Digging Deeper: Ganfeng is a large lithium producer with mines in Argentina, Australia and China. Strong demand from electric vehicle and power storage battery makers and surging lithium prices helped to boost its revenue and net profit by 275% and 292%, respectively, last year. But the global lithium industry got off to a rough start in 2023 as prices fell sharply from historic highs. As that happened, Ganfeng’s revenue still grew 26.5% year-over-year to 18.1 billion yuan in the first half of the year, but its net profit dropped 19.5% to 5.87 billion yuan.
Market Reaction: Ganfeng’s Hong Kong shares fell on Tuesday to close down 2.7% at HK$32.05 by the midday break, a new 52-week low.
Translation by A. Au
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