Ganfeng Lithium Group Co.,Ltd. reported a dramatic earnings reversal in the first half of the year, driven by a rebound in lithium product prices and strong growth in battery shipments. The company's net profit attributable to shareholders exceeded RMB 4.2 billion, marking a nearly tenfold increase from the low base of a loss in the prior-year period.

According to the 2026 interim report released on August 28, the company recorded revenue of RMB 23.097 billion, a year-on-year increase of 175.75%. Net profit attributable to shareholders swung to a profit of RMB 4.257 billion, reversing the RMB 531 million loss reported in the same period last year. Non-GAAP net profit reached RMB 3.848 billion, up 521.56% year-on-year. Basic earnings per share stood at RMB 2.04, while the weighted average return on equity climbed to 9.09%.

The surge in financial performance was fueled by two key drivers: revenue from lithium series products jumped nearly threefold to RMB 14.197 billion, while lithium battery series revenue grew 163.22% to RMB 7.831 billion. The gross margin for lithium compounds expanded by 34 percentage points to 42.44%, marking the primary source of profitability improvement. For investors, this turnaround underscores the company's ability to navigate through the lithium price cycle trough, although the full price cycle observed within the half—rising then pulling back—suggests that sustaining this performance into the second half remains uncertain.

The complete lithium price cycle: gains captured during the upswing

During the first half of 2026, prices of major lithium compounds in China followed a trajectory of initial gains followed by a pullback. In early 2026, battery-grade lithium carbonate prices rose steadily, supported by downstream restocking demand and tight supply. The rally accelerated in the second quarter, peaking in May. However, prices corrected sharply from the highs by mid-year as new capacity came online, imported spodumene supply increased, and downstream purchasing slowed.

On the spodumene front, data from Fastmarkets showed that as of June 2026, the CIF China price for 5% to 6% spodumene concentrate ranged between USD 2,150 and USD 2,270 per tonne, up 35% to 45% from the start of the year, reflecting the overall strength of lithium prices in the first half. The company's Goulamina spodumene project Phase I ramped up to near-full capacity during the reporting period, producing 233,800 tonnes of lithium concentrate in the first half. The Cauchari-Olaroz salt lake project in Argentina Phase I produced 19,000 tonnes of lithium carbonate, with capacity utilization steadily improving.

The lithium compounds segment was the largest contributor to financial performance, generating revenue of RMB 14.197 billion with a gross margin of 42.44%, a sharp improvement from the 8.36% margin recorded a year earlier. Management attributed the improvement to higher lithium prices, economies of scale, and improved capacity utilization, noting that operating cost growth of 112.53% was significantly lower than the 175.75% revenue increase.

Battery and storage businesses accelerate as twin engines, full production supports second-half output

The lithium battery business also delivered a standout performance in the first half. Capacity utilization for the company's energy storage cells approached 100%, running at full capacity. The self-developed 588Ah and 648Ah large cells at Nanchang Ganfeng Lithium were positioned as industry benchmark products. The 588Ah production line has begun trial commissioning, with capacity ramp-up planned for the third quarter of 2026. The 5MWh standard energy storage cabin has already achieved mass production.

Against this backdrop, data from the China Automotive Power Battery Industry Innovation Alliance showed that cumulative production of power and storage batteries in China reached 1,068.9 GWh in the first half of 2026, up 53.3% year-on-year. Storage battery sales totaled 318.1 GWh, up 83.4%, growing notably faster than power batteries. According to forecasts from Changjiang Securities Research, global energy storage battery demand for 2026 is expected to reach approximately 960 GWh, up 55% year-on-year. Management stated that the energy storage sector is transitioning from "deployed but unused" to "built for use," making it the strongest incremental growth driver for the company's battery business.

In the consumer battery segment, the Ganfeng Electronics and Huizhou Ganfeng bases jointly operate at a production capacity of 1.5 million cells per day. For power batteries, the company has established a full-scenario commercial vehicle battery matrix, with high-safety products achieving an energy density of 193Wh/kg.

Solid-state batteries accelerate toward commercialization, low-altitude economy opens new avenues

Solid-state battery technology serves as the core pillar of the company's differentiated competitive strategy. The company disclosed that its 400Wh/kg product has surpassed 1,100 charge cycles in cycle life testing and completed engineering validation. The world's first 500Wh/kg-class 10Ah product has achieved small-batch mass production. On the commercial application front, the company has completed solid-state battery vehicle installation and operation, and has partnered with low-altitude aircraft companies to achieve installation and test flights.

The low-altitude economy, designated as a national emerging pillar industry, was included for the first time alongside integrated circuits and aerospace in the core strategic emerging industry framework of the 2026 government work report. The company has developed customized battery solutions for low-altitude flight applications, suitable for both drones and manned aircraft scenarios. Multiple silicon-based and lithium-metal batteries have begun batch application in industrial and consumer drones. Additionally, the company has completed product adaptation testing and small-batch supply deliveries to leading robotics companies.

Research and development investment continued to intensify, with R&D expenses reaching RMB 740 million in the reporting period, up 70.59% year-on-year and representing approximately 3.2% of revenue. The increase was primarily driven by higher inventory consumption and personnel costs.

From a financial structure perspective, the company's debt-to-asset ratio edged up slightly from 54.23% at the start of the year to 55.12%, while total assets expanded to RMB 122.3 billion. Cash and cash equivalents increased by approximately RMB 2.7 billion from the start of the year to RMB 11.176 billion, and operating cash flow reached RMB 1.328 billion, up 342.24% year-on-year.

It is worth noting that non-recurring gains totaled RMB 409 million in the period, with the largest contributor being investment income of RMB 563 million from the partial disposal of shares in Australian company PLS. Excluding this item, the underlying operational turnaround remains substantial, as evidenced by non-GAAP net profit of RMB 3.848 billion.