Lithium Industry Investment Value Revaluation and Capital Market Analysis

Against the backdrop of lithium carbonate prices exceeding 120,000 yuan/ton and inventory dropping to 105,400 tons (at an extremely low level), the capital market has once again shown differentiation in lithium resource targets. Ganfeng Lithium and Tianqi Lithium rose by 3.69% and 4.32% today, with closing prices of 68.57 yuan and 57.93 yuan respectively, reflecting investors’ pursuit of upstream scarcity and high prosperity; CATL, BYD, and material companies Tongwei Co., Ltd. and Tianci Materials also saw varying degrees of capital inflow under high-price transmission [0]. Current stock prices are highly linked to industry fundamentals, meaning short-term price elasticity and financial leverage will become key variables for valuation adjustments [0].

• Profit Driver
  : Record-high lithium carbonate prices directly boost gross margins. Upstream enterprises have relatively rigid cost structures (mining + smelting fixed costs) and high price transmission rates, so they have the largest elasticity in revenue and cash flow. Low inventory, supply shortages (midstream collective production suspension to support prices), and downstream expectations of high prices all strengthen short-term pricing power.
• Risks
  : If lithium carbonate prices rise too fast, some downstream players may switch to low-nickel/iron phosphate or lock prices in advance; meanwhile, the discontinuation of SMM data means a decline in price transparency, so attention should be paid to corporate information disclosure to judge profit distribution. In addition, most enterprises still have high liabilities (e.g., negative TTM EPS for Tianqi and Ganfeng), so it is necessary to evaluate whether cash flow can continuously cover capital expenditures and expansion plans under high prices.
• Investment Recommendations
  : At the current high stage, we can favor high-quality targets with resource reserves + cost advantages (such as Albemarle and Ganfeng), and attach importance to ROIC and cash conversion capabilities. If needed, phased position building can be adopted to grasp price corrections or company performance verification nodes.

• Profit Transmission
  : Material enterprises are direct users of lithium carbonate, so price increases will compress their short-term gross margins. If midstream enterprises collectively suspend production to support prices, it means their bargaining power is weak; if they cannot同步拉涨 product prices (e.g., positive electrode material price increase documents), profit margins will be under pressure. It is recommended to focus on leading enterprises with cost reduction capabilities (diversified raw material sources, independent lithium hydroxide, etc.) and differentiated battery materials (high-nickel, silicon-based anodes) (such as Easpring Material Technology and Shanshan Co., Ltd.) to mitigate price fluctuations.
• Inventory and Strategy
  : The reasonable inventory is expected to reach 169,000 tons by 2026, indicating that midstream enterprises need to reserve in advance but not overstock, otherwise capital costs will rise. Choosing companies with healthy financial structures and reasonable debt ratios can maintain operational stability during high-price periods.

• Cost vs. Sales Pass-through
  : Due to long-term orders, battery enterprises’ ability to absorb lithium carbonate prices mainly depends on price adjustments by downstream vehicle manufacturers + sustainability of government subsidies. Current subsidy policy expectations are slightly higher than market expectations, partially alleviating cost pressures; meanwhile, the downstream price increase cycle has lengthened, so in the short term, it is necessary to offset cost increases by improving monomer energy density and reducing other material costs (e.g., cobalt-free formulas).
• Profit Distribution Evolution
  : If high lithium carbonate prices persist, downstream enterprises may return to the profit model of “high-end batteries + services” (e.g., customized battery systems, energy storage solutions) to shift profit sources. It is recommended to focus on enterprises with price pass-through capabilities, self-developed material resources or overseas layouts, and “battery + system” packaging models.

1. Upstream-Midstream Profit Distribution
   : If lithium carbonate prices rise beyond expectations and midstream enterprises cannot raise prices同步, profits will concentrate upstream. It is necessary to focus on upstream capacity utilization and whether long-term agreements + segmented pricing mechanisms are adopted (which can lock in part of future cash flow).
2. Midstream-Downstream Transmission Efficiency
   : If midstream enterprises can obtain higher gross margins through integration (e.g., materials + batteries or in-depth collaboration with vehicle manufacturers), they can partially offset high lithium carbonate costs; otherwise, profits will be eroded.
3. Downstream and Vehicle Manufacturers
   : If vehicle manufacturers cannot fully pass on costs, they may reduce purchases of high-nickel and high-cost batteries, affecting downstream orders and profits. At this time, the ability to sink businesses (e.g., energy storage) or use alternative materials (e.g., iron phosphate) determines their long-term profitability.

• Upstream
  : In the short term, price dividends can be reflected through valuation premiums (PB/EV), but close attention should be paid to capacity release and debt risks. It is recommended to allocate leading enterprises with multi-asset reserves and redundant capacity.
• Materials
  : Choose enterprises with pricing power, product gradients, and strong supply chain control; focus on their production and sales rates, cost control, and whether they can participate in the battery order chain.
• Batteries
  : Attach importance to gross margin stability and downstream customer structure; diversified strategies (overseas, energy storage, data centers) are key to resisting raw material fluctuations.

• Policy Risks
  : If subsidy policies are adjusted, downstream profit pressure will be great; pay attention to subsequent announcements from the Ministry of Industry and Information Technology/Ministry of Finance.
• Price Fluctuations
  : If lithium carbonate prices fall rapidly, it will significantly affect upstream valuations. It is recommended to set dynamic positions and hedging strategies.
• Industry Concentration
  : If centralized procurement or “metal price correction” occurs, attention should be paid to whether the company’s bargaining model is flexible enough.

For more in-depth industry chain models, financial simulations, or company comparison analyses, you can consider enabling the in-depth research mode to use brokerage databases and professional analysis tools to generate multi-scenario valuations and sensitivity assumptions.

[0] Jinling API Real-time Market (Closing Prices on December 27, 2025, covering Ganfeng Lithium, Tianqi Lithium, CATL, BYD, Yunnan Energy New Materials, Tianci Materials)