GANFENGLITHIUM (01772) continued its downward trajectory, dropping over 3% following yesterday's intraday plunge exceeding 6%. Shares traded at HK$24 with turnover reaching HK$159 million at publication time.

The lithium producer recently projected a net loss attributable to shareholders between RMB300 million and RMB550 million for the first half, representing a year-on-year improvement in net loss reduction ranging from 27.67% to 60.55%. CLSA analysis indicates the company recorded a Q2 net loss of approximately RMB69 million based on median estimates. While this reflects significant narrowing from Q1's RMB356 million loss and the year-ago period's RMB321 million deficit, it underperformed market expectations of a RMB43 million loss.

UBS anticipates negative investor reaction to the profit warning, maintaining its "Sell" rating with an HK$18.1 target price. Morgan Stanley highlighted concerning supply-demand dynamics, noting China's planned lithium production growth continues to outpace demand expansion in July. The report cautioned that without substantial production cuts in regions like Jiangxi's Yichun, recent price rebounds may prove unsustainable. Consequently, GANFENGLITHIUM's Q3 earnings could remain under pressure, prompting Morgan Stanley to reiterate its "Underweight" rating with an HK$14.3 target.