Materials, IPO & Equity Analyst

Venkat Ramana Nandyal

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Bottom-Up

Shares of <a href="https://www.smartkarma.com/entities/ganfeng-lithium-co-ltd" target="_blank" data-smartkarma-citation="entities:26795:1" rel="noopener">Ganfeng Lithium (1772 HK)</a> has increased over 250% in the last three quarters. The spectacular rally is only second to <a href="https://www.smartkarma.com/entities/fortescue-metals-group-ltd" target="_blank" data-smartkarma-citation="entities:41:1" rel="noopener">Fortescue Metals (FMG AU)</a> in our mining universe.Our analysis indicates that Ganfeng’s returns are on a weak foundation of collapsing lithium prices due to over-supply and weak financials.On the bright side, the company has entered offtake agreements with LG Chem and Tesla for at least the next 3 years. We believe that the market is pricing a significant premium on Ganfeng for being a part of Tesla’s supply chain.We believe the stock has now decoupled from its financials and lithium market fundamentals and trading as an associate/cluster of Tesla. We believe the stock rally despite the collapse in profitability due to COVID has increased downside risk in short to midterm.   <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/153/402/original/stock%20plot.png?1597773452" class="editor-image img-responsive" data-smartkarma-image-id="153402"></figure>

Shares of Ganfeng Lithium (1772 HK) has increased over 250% in the last three quarters. The spectacular rally is only second to Fortescue Metals (FMG AU) in our mining universe.Our analysis indicates that Ganfeng’s returns are on a weak foundation of collapsing lithium prices due to over-supply and weak financials.On the bright side, the company has entered offtake agreements with LG Chem and Tesla for at least the next 3 years. We believe that the market is pricing a significant premium on Ganfeng for being a part of Tesla’s supply chain.We believe the stock has now decoupled from its financials and lithium market fundamentals and trading as an associate/cluster of Tesla. We believe the stock rally despite the collapse in profitability due to COVID has increased downside risk in short to midterm.   

Ganfeng Lithium: Will the Rally ‘Peter Out’ as Fundamentals Catch-Up

Chile

Empresas CMPC S.A. manufactures and markets wood and forest products.  The Company produces cellulose, graphic papers, cardboard, tissue paper, office paper, newsprint, and packaging materials.  CMPC is based in Chile and, through subsidiaries, markets its products in Latin America, North America, Europe, and Asia.

Cap SA, through its subsidiaries, mines, processes, and distributes iron and manganese ores for commercial and industrial uses.  The Company manufactures liquid, laminated, and finished steel products.

Orosur Mining Inc. is a mineral exploration company. The Company operates a producing gold mine in Uruguay (San Gregorio), and has assembled an exploration portfolio of  assets in Uruguay & Chile and Argentina.

MITSUBISHI GAS CHEMICAL COMPANY, INC. produces chemical products such as xylene and methanol.  The Company also manufactures engineering plastics and specialty chemicals.

Orica Limited is a diversified manufacturing company.  The Company produces industrial and specialty chemicals, polyethylene, surface coatings for vehicles, food and beverage flavoring and fragrances, packaging and appliances. The Company also supplies explosive and blasting services to the mining, quarrying and construction industries.

Resonac Holdings Corporation manufactures and distributes chemical products. The Company produces synthetic resins, petrochemical products, inorganics, and other related products. Resonac Holdings also produces ceramics, metals, carbon, electronic materials, and other products.

Mitsui Chemicals, Inc. manufactures and markets a variety of chemical products. The Company's products include ethylene, propylene and other petrochemicals, basic chemicals, synthetic resins, and fine chemicals.  The Company operates worldwide.

Zhejiang Longsheng Group Co., Ltd. manufactures a variety of dyes including high intensity and rapid-dying Lonsperse Dye. The Company sells its products domestically and exports worldwide.

Zhejiang Longsheng Group Co., (600352 CH)

Huntsman Corporation manufactures differentiated and commodity chemical products.  The Company markets a broad range of chemical products and formulations to a diversified group of consumer and industrial customers. Huntsman's products are used in a range of applications, including those in adhesives, aerospace, automotive, construction products, and consumer products.

Zhejiang Huafeng Spandex Co., Ltd. manufactures and markets spandex products.

SKC Co., Ltd. manufactures a variety of films, including polyester films, silicon coated films, and inkjet films.  The Company also produces chemical products, such as propylene oxide, propylene glycol, and styrene monomer. In addition, SKC provides materials for photovoltaic.

Nissan Chemical Industries, Ltd. produces a variety of chemical products, ranging from basic chemicals to functional chemical products.  The Company also manufactures agrochemicals and pharmaceutical products.

Balchem Corporation develops, manufactures, and markets specialty performance ingredients for the food, feed, and medical sterilization industries. The Company micro-encapsulates performance ingredients, and also repackages and markets specialty gases. Balchem sells its products through its own sales force, independent distributors, and sales agents.

Sociedad Quimica y Minera de Chile SA produces and markets specialty fertilizers including potassium nitrate, sodium nitrate, and potassium sulfate for the agricultural industry.  The Company also produces industrial chemicals, iodine and lithium.  SQM markets its products in over 100 countries.

Sociedad Quimica y Minera de Chile (SQM US)

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Ganfeng Lithium: Will the Rally ‘Peter Out’ as Fundamentals Catch-Up

Shares of Ganfeng Lithium (1772 HK) has increased over 250% in the last three quarters. The spectacular rally is only second to Fortescue Metals...

Venkat Ramana Nandyal