Key takeaway

In 2025, net profit attributable to shareholders of the parent company was -RMB458mn, +47% YoY, and net profit excluding non-recurring items was -RMB424mn, +52% YoY. In 1Q26, net profit attributable to shareholders of the parent company was RMB400mn, +357% YoY and +476% QoQ. In 2025, the company's lithium iron phosphate cathode shipments reached 375,100 tons, up 64.3% YoY. In 1Q26, the company's shipments are estimated at 112,000 tons, +51% YoY and -13% QoQ, with production continuing to run at full capacity. Benefiting from the implementation of processing fee hikes in the lithium iron phosphate segment, along with the company's scale effects and cost reduction and efficiency gains, in 2025net profit attributable to shareholders of the parent company narrowed its loss significantly. In 1Q26, net profit attributable to shareholders of the parent company turned positive for the first time since 2023, with net profit per ton reaching RMB3,500/ton, representing substantial improvement both YoY and QoQ.

Event

The company released its 2025 annual report and 1Q26 report.

In 2025, the company recorded revenue of RMB11.492bn, +53% YoY. Net profit attributable to shareholders of the parent company was -RMB458mn, +47% YoY, and net profit excluding non-recurring items was -RMB424mn, +52% YoY. Among them, in 4Q25 revenue was RMB4.156bn, +56% YoY and +43% QoQ. Net profit attributable to shareholders of the parent company was -RMB106mn, +61% YoY and -23% QoQ. Net profit excluding non-recurring items was RMB21mn, +108% YoY and +124% QoQ. In 1Q26, revenue was RMB5.38bn, +136% YoY and +29% QoQ. Net profit attributable to shareholders of the parent company was RMB400mn, +357% YoY and +476% QoQ. Net profit excluding non-recurring items was RMB423mn, +1914% QoQ.

Risks

1) Downstream demand falls short of expectations: Sales volume may be affected by weak demand and fall short of expectations, thereby impacting the company's related business shipments and profitability. For every 10,000-ton reduction in lithium iron phosphate cathode shipments, we estimate an impact of RMB25-30mn on the company's net profit.

2) The raw material prices may fluctuate more than expected: Since 2021, the prices of raw materials have shown high periodical volatility. The high upstream prices, combined with its volatility will affect terminal demand, and disrupt companies' performance in the short run. In particular, lithium carbonate is the core raw material for lithium iron phosphate cathode producers. If its price drops rapidly in a short period, the company will incur impairment losses.

3) Slower-than-expected progress of the company's key projects: For the company as a participant in the new energy sector, the progress of major projects is the key to supporting the revenue and profits, and is also a reflection of the company's growth potential. The slower-than-expected progress of major projects will affect its current and long-term performance.

4) Deteriorating competitive landscape and downside risk to processing fees: Currently, there are numerous capacity expansion plans within the industry, concentrated on commissioning and release from the second half of 2026 to 2027, which may lead to a deteriorating competitive landscape and downside risk to processing fees.