Key takeaway

Driven by energy storage demand, the lithium market structure will improve in 2026. The industry has passed the cycle trough, and the lithium price anchor has shifted from cost support to reasonable profit. The company's lithium ore costs sit on the left side of the global cost curve, positioning it to fully benefit during the lithium price upcycle. The company's 2025 annual report is broadly in line with expectations. The iron ore fundamental base remains solid, maintaining positive growth despite pressure on iron concentrate powder prices. The core highlight lies in the lithium ore business moving from 0 to 1 — the Sichuan Jiada lithium mine has begun contributing profit, and the Hunan Jijiaoshan mine, the largest single lepidolite mine in China, is expected to commence production in 4Q26. 2026 will mark the first year of the company's "iron + lithium" dual-core business synergy. As production capacity gradually ramps up thereafter, earnings are expected to enter a high-growth trajectory.

Event

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

In 2025, total operating revenue was RMB4.090bn, up 6.43% YoY. Net profit attributable to shareholders of the parent company was RMB736mn, down 2.03% YoY. Basic EPS was RMB0.50, and average ROE was 10.64%. In 1Q26, total operating revenue was RMB814mn, down 12.07% YoY. Net profit attributable to shareholders of the parent company was RMB158mn, down 29.89% YoY. Basic EPS was RMB0.10, and average ROE was 2.13%.

Risks: The company operates in a cyclical industry, with revenue highly dependent on iron ore concentrate and lithium carbonate. As typical bulk commodities, the prices of these two products are deeply tied to downstream industries and the macroeconomic cycle. Against the backdrop of weak recovery in real estate and infrastructure demand, steel prices remain persistently weak over the long term, which can easily drag down the selling price of iron ore concentrate and thereby squeeze the company's gross margin. On the other hand, the new energy lithium segment is also not immune to the cyclical fate of the industry. Lithium salt prices are significantly influenced by variables such as supply-demand dynamics and overseas policies. If lithium prices experience volatility again in the future, it will directly weaken the profit realization capability of the company's lithium mining projects. In addition, although the company's two major lithium mining projects at Jijiaoshan in Hunan and Jiada in Sichuan are endowed with excellent resources, they are still in the "0-to-1" critical infrastructure construction phase. Mine construction inherently features large investment scales, long construction periods, and complex approval processes, making it highly susceptible to project progress falling short of expectations.