Morgan Stanley's research report indicates mainland China's planned lithium production growth continued outpacing demand expansion in July. The firm cautions that without substantial output cuts in key producing regions like Yichun, Jiangxi, the recent price rebound appears unsustainable. Consequently, Ganfeng Lithium (01772.HK) faces persistent earnings headwinds in the third quarter. Morgan Stanley maintains its HK$14.3 target price alongside an "Underweight" rating.

The investment bank notes Ganfeng Lithium anticipates a first-half net loss between RMB 300 million and RMB 550 million. Though this represents a narrowing from last year's RMB 760 million net loss during the same period, it implies second-quarter performance ranging from a RMB 56 million profit to a RMB 214 million loss. This compares with a RMB 356 million loss in Q2 2023. Additionally, projected recurring net losses for H1 stand at RMB 500 million to RMB 950 million versus last year's RMB 160 million recurring loss. This translates to Q2 recurring net losses between RMB 258 million and RMB 708 million, exceeding Q2 2023's RMB 242 million recurring loss. Morgan Stanley views the quarterly results as broadly aligning with market expectations.