A front runner in China lithium industry
Global top three lithium compound producer with integrated value chain that includes mining resources
First-tier client base with long term sales agreements
Projected net profit growth c.83% CAGR in 2019-2021 backed by new projects
Initiating coverage with BUY H and TP of HK$30.0
Our BUY rating is premised on:-
(1) sales volume growth at c.34% compound annual growth rate (CAGR) during FY19-21F supported by its strong partnerships with major auto manufacturers such as Tesla and BMW, and strong offtake from blue chip battery suppliers such as LG Chemical (LG Chem),
(2) GFLi’s sound earnings outlook of c.83% CAGR during FY19-FY21F with improving lithium metal and compound margin.
Valuation:
GFLi is trading at an attractive valuation at below 0.6x FY20F PE to FY19-FY21F EPS growth.
Our target price (TP) of HK$30.0 is based on 0.7x PEG, translating into price earnings ratio (P/E) of 57x FY20F and 29x FY21F.
This represent a premium over its peers which is justified by its strong growth prospect and superior customers portfolio.
Our TP for A-share is RMB45.0 on 0.9x PEG, initiate HOLD.
Source: DBS
https://researchwise.dbsvresearch.com/R ... =fdfaekhfi