Comprehensive Assessment of Inventory Impairment Risk for Ganfeng Lithium

Based on the collected data, I will conduct a

for you.

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According to public information, Ganfeng Lithium’s inventory scale reaches

, which has significant financial implications [0].

Indicator	Value	Risk Assessment
Current Ratio	0.73	Below warning line (1.0), short-term debt repayment pressure
Quick Ratio	0.46	Extremely low, inventory liquidity is crucial
Inventory/Current Assets Ratio	Expected >50%	High inventory proportion
Expected 2024 Loss	1.4-2.1 billion yuan	Operating pressure continues to increase

For an enterprise with total assets of approximately 40-50 billion yuan, an inventory of 10.6 billion yuan means

, which is a relatively high proportion among manufacturing enterprises [0].

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In 2024, lithium salt prices experienced a sharp decline:

• Early 2023
  : Lithium carbonate prices once reached as high as 600,000 yuan/ton
• 2024
  : Prices continued to fall, once dropping below 120,000 yuan/ton [1]
• Current level
  : Maintains volatility in the range of 100,000-120,000 yuan/ton

This price level has

. According to industry data, about 58% of lithium salt enterprises have a per-ton cost higher than 100,000 yuan [1], meaning most enterprises are in a loss-making state.

Enterprise Type	Estimated Cost Line	Current Price Position
Australian spodumene lithium extraction	80,000-100,000 yuan/ton	Near marginal cost
Salt lake lithium extraction	40,000-60,000 yuan/ton	Still profitable
Mica lithium extraction	100,000-120,000 yuan/ton	On the verge of loss
Recycled lithium extraction	60,000-80,000 yuan/ton	Slight profit state

As an enterprise with multiple resource layouts including spodumene and salt lakes, Ganfeng Lithium’s

. If inventory costs are estimated based on this, the current selling price of 100,000-120,000 yuan/ton can barely cover costs, or even lead to losses.

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. Reasons are as follows:

• Lithium carbonate price has dropped more than 80% from the peak
• Current price is near the cost line, limited downside but weak upside
• Global supply is expected to exceed demand by nearly 200,000 tons in 2025 [1], putting pressure on prices

• 10.6 billion yuan inventory is huge
• Industry overcapacity, downstream demand growth slows down
• New energy vehicle subsidies decline, power battery demand growth rate drops

• Lithium salt products have shelf life limits, long-term storage leads to quality degradation
• If the 2024 backlogged inventory is sold in 2025, it may face greater impairment pressure

Based on conservative estimates, assume:

• Average inventory cost: 100,000 yuan/ton
• Current market price: 110,000 yuan/ton
• Net realizable value slightly higher than cost

, accounting for 5%-14% of total inventory.

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Indicator	Warning Line	Current Status	Prediction
Lithium Carbonate Price	<100,000 yuan/ton	110,000-120,000 yuan	Near warning
Inventory Turnover Days	>180 days	Estimated >200 days	Warning
Gross Margin	<15%	Negative	Severe
Capacity Utilization	<60%	Estimated 50-60%	Warning

Lithium Carbonate Price	Inventory Impairment Risk	Impact on Net Profit
150,000 yuan/ton	Low	Profit improvement
120,000 yuan/ton	Medium	Break-even
100,000 yuan/ton	High	Increased loss
80,000 yuan/ton	Extremely High	Severe loss

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1. Inventory impairment risk is high
   , the 10.6 billion yuan inventory faces significant impairment pressure in the current price environment
2. Company liquidity is under pressure
   , quick ratio is only 0.46, inventory liquidity directly affects short-term debt repayment
3. Industry cycle is bottoming
   , lithium salt prices are near cost but supply-demand imbalance is hard to reverse in short term
4. Of the expected 2024 loss of 1.4-2.1 billion yuan
   , a significant portion is expected to come from inventory impairment and changes in fair value of assets

• Price inflection point
  : Closely monitor whether lithium carbonate prices can hold the 100,000 yuan/ton cost line
• Capacity clearance
  : Substantial production cuts in the industry will help stabilize prices
• Policy changes
  : Impact of new energy vehicle policies and energy storage policies on the demand side
• Company response
  : Whether Ganfeng Lithium adopts strategies such as production cuts or holding back sales to control risks

• If lithium carbonate prices fall further below 100,000 yuan/ton, inventory impairment may increase significantly
• Company current ratio <1, there is certain short-term debt repayment pressure
• Industry overcapacity pattern is hard to fundamentally change in short term

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[0] Jinling AI - Ganfeng Lithium’s financial and market data
[1] Wall Street Journal Chinese Edition - Lithium Industry Overcapacity and Price Trend Analysis (https://cn.wsj.com/articles/中国财经媒体报道汇总-全面开创武器装备建设新局面)
[2] Yahoo Finance - Ganfeng Lithium 2024 Profit Warning Announcement (https://hk.finance.yahoo.com/news/贛鋒鋰業-01772-HK-估計去年轉虧14億至21億人民幣)