rating company buy ganfeng...

Deutsche Bank Markets Research

Rating

Buy Asia China

Resources Metals & Mining

Company

Ganfeng Lithium

Date 9 May 2016

Initiation of Coverage

Ready for the EV charge

Reuters Bloomberg Exchange Ticker 002460.SZ 002460 CS SHZ 002460

Forecasts And Ratios

Year End Dec 31 2014A 2015A 2016E 2017E 2018E

Sales (CNYm) 869.5 1,353.9 2,587.6 3,594.0 3,479.1

Reported NPAT (CNYm) 85.7 125.2 819.0 1,154.2 944.3

Source: Deutsche Bank estimates, company data 2 Multiples and yields calculations use average historical prices for past years and spot prices for current and future years, except P/B which uses the year end close

Initiating coverage on Ganfeng with Buy

________________________________________________________________________________________________________________

Deutsche Bank AG/Hong Kong

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016.

Price at 6 May 2016 (CNY) 67.60

Price target - 12mth (CNY) 78.00

52-week range (CNY) 69.31 - 15.88

HANG SENG INDEX 20,110

James Kan

Research Analyst (+852) 2203 6146 [email protected]

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Ganfeng Lithium

HANG SENG INDEX (Rebased)

Performance (%) 1m 3m 12m

Absolute 20.0 57.6 183.6

HANG SENG INDEX -0.5 4.3 -27.2

Source: Deutsche Bank

Ganfeng Lithium is one of the largest lithium compound processors in China, with a total capacity of c.30ktpa LCE in 2016E. Ganfeng is directly benefiting from higher ASPs of lithium compounds, driven by booming EV sales and lead-acid battery replacement. Through purchasing shares in Process Minerals International, Ganfeng will become the largest shareholder (43.1%) of the Mt Marion project, which will solve the problems of an uncertain raw material supply in the long term. With a target price of RMB78, we initiate coverage on Ganfeng Lithium with a Buy rating Tripled demand in the next decade In our Lithium 101 report “Welcome to the Lithium-Ion Age”, we forecast that global lithium demand will triple over the next 10 years, driven by electrical vehicles, energy storage and traditional markets. By 2025, global battery consumption will exceed 535GWh. This has a major impact on lithium. Turning to the supply side, the response from primary producers has not been fast enough to match demand. Recent price hikes, however, have encouraged owners to develop new assets to enter the market, but even with this increase, we believe that the market will not start to rebalance until mid-2017. Price of lithium compounds expected to remain high We believe that, after a 40% YoY hike in 2015, the price of lithium carbonate will experience a further 143% YoY increase in 2016 and remain high at RMB120,000/t, (excl. VAT) and RMB100,000/t in 2017. As a lithium mining producer and compound processor, Ganfeng will benefit from both owning the raw material and the processing technology as demand rises to absorb its new capacity and spodumene concentrates from Mt. Marion. Raw material supply shortage in the short term, no big concern in the long run Ganfeng has significantly expanded its processing capacity but was constrained due to a shortage of raw material supply. However, through an exclusive sales agreement with RIM, Ganfeng will remove this bottleneck beginning in 3Q16. As Ganfeng becomes the largest shareholder in Mt. Marion, we believe that Ganfeng is likely to secure raw material supply from Mt. Marion in the long term to satisfy its capacity expansion plan. Valuation and risks With resilient lithium prices and strong shipment growth in the coming years, we forecast that Ganfeng’s 2016/2017E NPAT will grow 655% YoY and 41% YoY, respectively. Our TP was derived from a DCF model, with a WACC of 8.6%., cost of equity of 10.1%, risk-free rate of 3.9%, market risk premium of 5.6% and beta of 1.11. Using a terminal growth rate of 3% in line with industry growth, Our TP of RMB78 implies 17% upside potential and 2016/17E P/Es of 36x/25x. Major risks: a slower-than-expected ramp-up of the Mt. Marion project.

9 May 2016

Metals & Mining

Ganfeng Lithium


Model updated:06 May 2016

Running the numbers

Asia

China

Metals & Mining

Ganfeng Lithium Reuters: 002460.SZ Bloomberg: 002460 CS

Buy Price (6 May 16) CNY 67.60

Target Price CNY 78.00

52 Week range CNY 15.88 - 69.31

Market Cap (m) CNYm 25,208

USDm 3,876

Company Profile

Jiangxi Ganfeng Lithium Co., Ltd. researches and produces lithium products and operates import, export and manufacturing businesses for its own products. The Company's products include lithium metal, lithium aluminum hydride, lithium fluoride, lithium chloride, and other chemical products of lithium.

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Ganfeng LithiumHANG SENG INDEX (Rebased)

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James Kan +852 2203 6146 [email protected]

Fiscal year end 31-Dec 2013 2014 2015 2016E 2017E 2018E

Financial Summary

DB EPS (CNY) 0.42 0.24 0.34 2.20 3.10 2.53Reported EPS (CNY) 0.42 0.24 0.34 2.20 3.10 2.53DPS (CNY) 0.21 0.10 0.14 0.27 0.54 0.40BVPS (CNY) 7.4 3.9 5.0 6.9 9.5 11.6

Weighted average shares (m) 178 357 373 373 373 373Average market cap (CNYm) 1,940 6,319 10,622 25,208 25,208 25,208Enterprise value (CNYm) 1,660 6,273 10,523 24,729 24,242 23,439

Valuation MetricsP/E (DB) (x) 26.2 73.7 84.9 30.8 21.8 26.7P/E (Reported) (x) 26.2 73.7 84.9 30.8 21.8 26.7P/BV (x) 1.58 3.87 12.47 9.75 7.12 5.82

FCF Yield (%) nm nm 2.2 2.0 2.7 3.8Dividend Yield (%) 1.9 0.6 0.5 0.4 0.8 0.6

EV/Sales (x) 2.4 7.2 7.8 9.6 6.7 6.7EV/EBITDA (x) 14.2 40.0 46.1 22.7 16.8 19.9EV/EBIT (x) 20.1 63.4 71.0 25.2 18.2 21.7

Income Statement (CNYm)

Sales revenue 686 869 1,354 2,588 3,594 3,479Gross profit 158 183 289 1,136 1,502 1,263EBITDA 117 157 228 1,088 1,439 1,178Depreciation 34 58 80 108 108 98Amortisation 0 0 0 0 0 0EBIT 83 99 148 980 1,331 1,080Net interest income(expense) -6 -4 -11 -5 0 9Associates/affiliates 0 0 0 0 51 39Exceptionals/extraordinaries 0 0 0 0 0 0Other pre-tax income/(expense) 9 7 13 17 17 17Profit before tax 86 101 150 993 1,399 1,145Income tax expense 17 17 25 174 245 201Minorities -5 -1 0 0 0 0Other post-tax income/(expense) 0 0 0 0 0 0Net profit 74 86 125 819 1,154 944

DB adjustments (including dilution) 0 0 0 0 0 0DB Net profit 74 86 125 819 1,154 944

Cash Flow (CNYm)

Cash flow from operations 64 11 366 608 797 1,063Net Capex -251 -149 -131 -110 -110 -110Free cash flow -187 -138 235 498 687 953Equity raised/(bought back) 486 0 120 0 0 0Dividends paid -37 -36 -52 -100 -200 -150Net inc/(dec) in borrowings 207 60 -73 0 0 0Other investing/financing cash flows -6 -58 -431 -178 -51 -39Net cash flow 463 -171 -201 220 436 764Change in working capital -67 -145 109 -319 -465 21

Balance Sheet (CNYm)

Cash and other liquid assets 545 374 181 383 819 1,583Tangible fixed assets 569 657 734 716 698 690Goodwill/intangible assets 105 106 467 487 507 527Associates/investments 9 8 196 374 425 464Other assets 568 809 950 1,368 1,979 1,988Total assets 1,796 1,954 2,528 3,327 4,427 5,252Interest bearing debt 274 334 278 278 278 278Other liabilities 208 232 367 465 611 642Total liabilities 482 567 644 743 889 919Shareholders' equity 1,314 1,387 1,883 2,584 3,539 4,333Minorities 0 1 1 0 0 0Total shareholders' equity 1,313 1,388 1,883 2,584 3,539 4,333Net debt -271 -39 97 -105 -541 -1,305

Key Company Metrics

Sales growth (%) nm 26.7 55.7 91.1 38.9 -3.2DB EPS growth (%) na -42.2 39.6 554.4 40.9 -18.2EBITDA Margin (%) 17.0 18.0 16.9 42.1 40.1 33.9EBIT Margin (%) 12.0 11.4 10.9 37.9 37.0 31.0Payout ratio (%) 50.0 41.6 41.2 12.2 17.3 15.9ROE (%) 7.0 6.3 7.7 36.7 37.7 24.0Capex/sales (%) 36.6 17.3 9.7 4.3 3.1 3.2Capex/depreciation (x) 7.3 2.6 1.6 1.0 1.0 1.1Net debt/equity (%) -20.6 -2.8 5.1 -4.1 -15.3 -30.1Net interest cover (x) 14.4 22.3 13.6 216.0 nm nm

Source: Company data, Deutsche Bank estimates

9 May 2016

Metals & Mining

Ganfeng Lithium


Investment thesis

Outlook

Securing long-term raw material supplies has been a critical strategic step for Ganfeng. It was previously very exposed to swings in the availability of volume and moves in the market price of lithium. It already has the processing capacity in place to meet the surge in demand from EV battery manufacturers. With vertical integration now complete and as the Mt. Marion asset ramps up in 2H16, Ganfeng will be one of the five major players globally. These five majors (another four are Albemarle, Tianqi, SQM and FMC) control 45% of global lithium reserves.

Ganfeng has enlarged its lithium processing capacity to 30ktpa in 2016E/2017E, representing c.15% global market share. We expect that the sales volume will improve from c.18ktpa in 2015 to 27ktpa in 2017. The priceof battery-grade lithium carbonate, the benchmark price for lithium products, should remain at a high level (RMB120,000-83,000/t) due to unbalanced demand/supply until at least 2018 as strong EV sales and lead-acid battery replacement combined with slow ramp-ups of new lithium supply will likely continue to tighten global supply in the next three years. The impact will be a surge in earnings to RMB819m and RMB1177m, which is up more than five-fold this year and 44% in 2017.

The shares have performed strongly along with moves in the commodity price over the past six months, and as the Mt. Marion deal has moved ahead, Ganfeng has been a stand-out stock in the past quarter. Our DCF of the enhanced business generates a valuation of RMB78, indicating further upsidepotential.

Valuation

We derive our target price from a DCF model, with WACC of 8.6%. We adopt 10.1% as the cost of equity to reflect a risk-free rate of 3.9%, a market risk premium of 5.6% and beta of 1.11. Using a terminal growth rate of 3%, we set our target price at RMB78, implying 17% upside potential from current levels. Our target price implies 2016/17E P/Es of 36x/25x.

Risks

We highlight the following downside risks: 1) slower-than-expected demand from EV or other downstream industries; 2) a quicker-than-expected increase in lithium raw material supply, especially if there is a technology breakthrough in upstream salt lake brine extraction; 3) a slower-than-expected ramp-up at the Mt. Marion project and Jiangxi Lithium in the middle of 2016; and 4) a larger-than-expected shortage of supply after 2019.

9 May 2016

Metals & Mining

Ganfeng Lithium


Valuation and risks

DCF-based target price of RMB78

We demonstrate our key assumptions for the DCF model in Figure 1. We derive our target price from a DCF model, with WACC of 9.2%. We adopt 11.2% as the cost of equity to reflect a risk-free rate of 3.9%, a market risk premium of 5.6% and beta of 1.3. Using a terminal growth rate of 3%, we set our target price at RMB78, implying 17% upside potential from current levels. Our target price implies 2016/17E P/Es of 36x/25x.

Figure 1: WACC for Ganfeng’s DCF valuation Figure 2: 12M forward PB vs. ROE

Source: Deutsche Bank Source: Deutsche Bank, Bloomberg Finance LP

Figure 3: Global peer comparison table

Source: Deutsche Bank, Bloomberg Finance LP

9 May 2016

Metals & Mining

Ganfeng Lithium


Price sensitivity

Sensitive to both cost and ASP

Ganfeng’s bottom line is sensitive to both the lithium carbonate price and cost. Every RMB5,000/t price hike for lithium carbonate will increase NPAT by 4%. By contrast, every RMB3000/t cost increase will cut NPAT by 2%.

Figure 4: EPS sensitivity analysis against LCE ASP and unit cost Lithium Carbonate ASP (RMB/t)

Lith

ium

Car

bo

nat

e U

nit

p

rod

uct

ion

co

st (

RM

B/t

)

105,000 110,000 115,000 120,000 125,000 130,000 135,000

38,213 -6% -2% 1% 5% 9% 12% 16%

41,213 -7% -4% 0% 3% 7% 11% 14%

44,213 -9% -6% -2% 2% 5% 9% 13%

47,213 -11% -7% -4% 0% 4% 7% 11%

50,213 -13% -9% -5% -2% 2% 6% 9%

53,213 -14% -11% -7% -3% 0% 4% 7%

56,213 -16% -12% -9% -5% -1% 2% 6%Source: Deutsche Bank estimates

Figure 5: Deutsche Bank estimates vs. Bloomberg Finance LP consensus 2016E 2017E 2018E

DB estimate Consensus Dbe/Cons. DB estimate Consensus Dbe/Cons. DB estimate Consensus Dbe/Cons.

Revenue 2,587.62 2,919.00 89% 3,594.02 3,475.00 103% 3,379.08 4,010.00 84%

EBIT 980.17 466.00 210% 1,382.30 684.00 202% 1,058.26 917.00 115%

NP 819.03 386.83 212% 1,151.43 568.00 203% 893.82 820.25 109%Source: Deutsche Bank estimates, Bloomberg Finance LP

9 May 2016

Metals & Mining

Ganfeng Lithium


Upstream: the sweet spot to enjoy the lithium-ion age

Tripling of demand in the next decade

In our Lithium 101 report, “Welcome to the Lithium-Ion Age”, we forecast that global lithium demand will triple over the next 10 years, driven by electrical vehicles, energy storage and traditional markets. By 2025, global battery consumption will exceed 535GWh. This has a major impact on lithium. Global demand increased to 184kt LCE in 2015 (+18%), leading to a market deficit and rapid price increases. We expect that lithium demand will reach 280kt LCE by 2018 (+18% three-year CAGR) and 530kt LCE by 2025 (+11% CAGR).

Global lithium production was 171kt LCE in 2015, with 83% of supply coming from four producers: Albemarle, SQM, FMC and Sichuan Tianqi. The supply market has not responded fast enough to demand, and recent price hikes have incentivised new assets to enter the market. Orocobre (17.5ktpa), Mt. Marion (27ktpa), Mt. Cattlin (13ktpa), La Negra (20ktpa), Chinese restarts (17ktpa) and production creep will take supply to 280kt LCE by 2018, in line with demand. Although the market will be in deficit in 2016, it will rebalance by mid-2017, which will see pricing normalise.

Figure 6: Global lithium supply and demand balance

Source: Deutsche Bank estimates

Our investigation into the lithium industry supply chain suggests that upstream lithium players should be the sweet spot of the whole supply chain. Mid-stream producers might be facing technological uncertainty and aggressive capacity expansion. Downstream producers will need to continue to cut the cost of batteries and EVs to ensure greater end customer adoption. In any case, upstream lithium producers will enjoy the lithium demand driven by downstream, regardless of the technological options. Meanwhile, the process of increasing supply by upstream players has been very slow. We also see the c.86% of market supply controlled by the top four suppliers as a major positive for lithium producers. As it is one of the biggest lithium compound processors in China, we believe that Ganfeng is capable of catching up to market demand with its newly constructed capacity from late 2016. Moreover, its position as the biggest shareholder in the Mt. Marion project should help it secure spodumene concentrate supply in the long term.

9 May 2016

Metals & Mining

Ganfeng Lithium


Major upstream player in the supply chain

The fifth-largest lithium producer in the world

Established in 2000 in Yuxin city, Jiangxi province, China, Ganfeng Lithium was originally just a processor, producing lithium products such as lithium carbonate, lithium metals and butyl lithium from raw material that it purchased, including spodumene and salt lake brine.

It has gradually expanded its position along the industry chain in the last several years. Today, Ganfeng has mining assets (from the investment in RIM which owns the Mt. Marion reserves), which will provide feedstock for the parent company’s processing operations. Furthermore, there are the lithium battery operations under the Mbell (see Figure 7). We expect that upstream mining and processing will be a major profit contributor, generating c.90% of gross profit, while downstream lithium battery manufacturing will provide c.10% of earnings.

Figure 7: Ganfeng’s major assets in operation along the industry chain

Source: Deutsche Bank, Company data

The Mt. Marion asset will ramp up in 2H16, which will make Ganfeng fully vertically integrated and rank as the fifth-largest lithium producer globally. The other four majors are Albemarle, Tianqi, SQM and FMC. These five companies control 45% of global reserves. See Figure 8.

9 May 2016

Metals & Mining

Ganfeng Lithium


Figure 8: Major lithium producers in the world

Source: Deutsche Bank estimates, Bloomberg Finance LP

We believe that the lithium compound operations will remain the key profit maker going forward. Figure 9 and Figure 10 show the projected revenue, NPAT and gross profit breakdown of Ganfeng’s primary operations. Deutsche Bank’s lithium price forecasts point to a 17% fall in prices from 2018, which is the reason for a drop in earnings that year. In the two following years, capacity and volume output will rise, which will offset the price decline in 2019E and 2020E. We forecast that its aggregate gross profit may continue to climb slightly, although the ASP of lithium compounds will decline from RMB120,000/t to RMB100,000/t.

Figure 9: Projected gross profit breakdown for Ganfeng’s

primary operations

Figure 10: Projected revenue and NPAT for Ganfeng

Source: Deutsche Bank estimates, Company data Source: Deutsche Bank estimates, Company data

9 May 2016

Metals & Mining

Ganfeng Lithium


Mt. Marion project

Second-largest spodumene mine in the world

Ganfeng has completed several important acquisitions in the past three years to achieve strategic vertical integration. It now has a presence in upstream raw material mining through Reed Industrial Minerals (RIM) in Australia, which operates the Mt. Marion project. Earnings from this investment will be recorded under the associates line in its reporting, but the key value of the asset is in terms of its consistent supply of raw material.

The Mt. Marion spodumene project is a joint venture between Mineral Resources, Neometals and Jianxi Ganfeng. The operation is currently under construction (A$50m capital budget) and will commence commissioning in June/July. The plant will produce 200ktpa of 6% Li2O spodumene concentrate, equivalent to c.25-27kt LCE. There is also scope for another 80ktpa (10kt LCE) from a flotation circuit. Therefore, Mt. Marion is going to be the second-biggest spodumene mine globally under operation in the next five years, second only to Tianqi’s Greenbushes project. See Figure 11 and appendix.

Figure 11: Comparison of major global spodumene projects

Source: Deutsche Bank, Neometals

Figure 12: Mt. Marion mineral resources as of September 2015 Category Tonnes (Mt) Li2O (%) Fe2O3 (%)

Indicated resource 10.05 1.45 1.33

Inferred resource 13.19 1.34 1.5

Total resource 23.24 1.39 1.43 Source: Neometals investor presentation, February 2016

To become the largest shareholder after exercising options In July 2015, Ganfeng signed contracts with Neometals and RIM. Neometals owns 70% of the equity in RIM, and RIM owns 100% of the Mt Marion project. Through these contracts Ganfeng 1) plans to acquire a 49% share in RIM for US$61m; 2) purchased a 25% share in the first phase, which was already completed; and 3) obtained a long-term exclusive sales agreement.

9 May 2016

Metals & Mining

Ganfeng Lithium


Current major shareholders of RIM are Ganfeng (25%), Neometals (45%) and PMI (30%). After the exercising of options (we assume that PMI will also exercise its option), the future shareholder structure is likely to be Ganfeng (43.1%), PMI (43.1%) and Neometals (13.8%).

According to the long-term exclusive sales agreement, Ganfeng is able to exclusively obtain all spodumene production (200ktpa) from Mt Marion in the first three years at market price from 3Q2016 and at least 100ktpa from the fourth year. We believe that, as the largest shareholder of Mt. Marion, Ganfeng will be able to secure a steady supply of spodumene concentrate in the long term even after the contract period of three years. With the ramp-up of RIM mainly in the middle of 2016, we expect that the bottleneck of raw material supply will be totally released.

New supply from other mining assets is limited Potential new supply of raw material, other than Mt. Marion, is likely to be from Jiangxi Lithium in China. Ganfeng purchased 100% of Jiangxi Lithium in early 2015. According to a previous plan, Ganfeng hoped to recover its spodumene production at the end of 2015, but this has been postponed to the middle of 1H16. Ganfeng believes that the initial output will be c.10ktpa of spodumene concentrate, equivalent to 1.2ktpa of lithium carbonate, and that it will ideally increase to 60-70ktpa of spodumene concentrate in 2017, equivalent to c.8ktpa of lithium carbonate. Therefore Jiangxi Lithium spodumene production cannot fully satisfy the needs of Ganfeng, but it could relieve the shortage of supply to some extent.

Ganfeng also has 51% equity in the Blackstairs lithium ore project in Ireland and 80% of the Mariana lithium brine project in Argentina. However, neither is currently in operation, and they are not expected to be developed in the short/medium term, nor will they significantly increase supply.

9 May 2016

Metals & Mining

Ganfeng Lithium


Lithium processing

Growing processing capacity with improving product mix

Providing more than 20 different kinds of lithium products, Jiangxi Ganfeng Lithium has the most comprehensive lithium product series of all Chinese lithium compounds producers. After steady capacity expansion in the past several years, Ganfeng’s total capacity (adjusted to the lithium carbonate equivalent) increased from c.2.9ktpa in 2007 to 12.7ktpa in 2014, and it will further enlarge to 30ktpa in 2016E, representing c.15% of global market share. The new factories had already been completed as of the end of 2015, and Ganfeng is waiting for the raw material supply to be available before raising output of finished products .

Ganfeng’s major products are lithium chloride, lithium metal, butyl lithium, lithium carbonate, lithium hydroxide and lithium fluoride, sales of which accounted for 85% of total revenue in 2015. We expect that processing will continue to be the key source of profit for Ganfeng going forward. Figure 13 demonstrates the gross profit breakdown for Ganfeng for the next five years.

New capacity for lithium batteries is ready Figure 14 shows the summary of Ganfeng’s major lithium product capacity. Including its newly constructed (2015) factories, Ganfeng now has capacity of 8ktpa, 1.5ktpa, 0.5ktpa, 11ktpa, 1.5ktpa and 10ktpa for lithium chloride, lithium metal, butyl lithium, lithium carbonate, lithium fluoride and lithium hydroxide, respectively. Total lithium carbonate equivalent adjusted production capability may represent a 15% global market share.

Figure 14: Capacity expansion of Ganfeng Lithium Tpa 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E

Lithium chloride 800 3600 3600 5000 6000 6000 6000 8000 8000 8000 8000 8000

Lithium metal 350 400 400 480 650 650 650 1000 1500 1500 1500 1500

Butyl Lithium 50 75 75 150 225 225 225 500 500 500 1000 1000

Lithium fluoride 600 600 600 600 600 1500 1500 1500 1500 1500 1500 1500

Lithium carbonate 500 500 3000 4000 5000 5000 5000 5000 5000 7000 12000 15000

Lithium hydroxide 3000 10000 10000 10000 10000Source: Deutsche Bank estimates, Company data

Figure 15: Estimated saleable capacity of Ganfeng Lithium 2007 2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E

Lithium chloride 0 0 0 0 0 0 0 0 0 0 0 0

Lithium metal 335 377 377 435 582 582 582 848 1,348 1,348 1,348 1,197

Butyl lithium 50 75 75 150 225 225 225 500 500 500 500 1000

Lithium fluoride 600 600 600 600 600 1,500 1,500 1,500 1,500 1,500 1,500 1,500

Lithium carbonate 77 77 2,577 3,577 4,577 3,943 3,943 3,943 ÿ 5,943 10,943 13,943

Lithium hydroxide 1,000 10,000 10,000 10,000 10,000Source: Deutsche Bank estimates, Company data

We note that several products (e.g. lithium chloride and lithium carbonate) are not only available for external sales but are also intermediate products for

Figure 13: Gross profit breakdown

by product


9 May 2016

Metals & Mining

Ganfeng Lithium


further deep processing products such as butyl lithium and lithium metal. Therefore for its saleable capacity estimation we assume that Ganfeng will usually prioritise the production of deeper processing products. As such, we estimate that Ganfeng’s total salable capacity is c.1.4ktpa for lithium metal, 0.5ktpa for butyl lithium, 1.5ktpa for lithium fluoride, 10ktpa for lithium carbonate and 10ktpa for lithium hydroxide at end-2016E. Figure 16 shows a map of processing routes for basic lithium compounds and further deeper processing for high-end lithium products. Figure 15 summarises the estimated saleable capacity of Ganfeng Lithium after adjusting some intermediate product capacity.

Figure 16: Processing routes of lithium products


Strong organic growth prospects of lithium compounds for lithium batteries Driven by strong EV sales and lead-acid battery replacement demand, we believe that lithium compounds for lithium batteries will contribute most of Ganfeng’s revenue growth and bottom line growth in the next three years due to: 1) improving sales volume; and 2) soaring ASPs. Figure 17 demonstrates that the gross profit contribution will significantly increase in 2016, mainly driven by better price/spread, and in 2017, driven by volume improvement.

Figure 17: Gross profit contributed by lithium carbonate and lithium hydroxite


We expect that the ramp-up of Ganfeng’s new 10ktpa lithium compound projects helped increase c.10ktpa of lithium carbonate or lithium hydroxide

9 May 2016

Metals & Mining

Ganfeng Lithium


capacity at the end of 2015 and a further expansion of lithium carbonate capacity to 15ktpa by the end 2018E as we expected. In the meantime, Ganfeng maintains the flexibility to adjust the proportion of final products of lithium carbonate and lithium hydroxide to adapt to changes in market preference for lithium battery raw materials. The current prevailing market choice is lithium carbonate, but lithium hydroxide is gradually increasing its presence, as it is widely acceptable as a raw material for NMC/MNA by Japanese and Korean producers. At the end of 2015, almost 80% of Ganfeng’s lithium hydroxide was exported to Japanese and Korean companies like Panasonic, LG Chemical and Samsung SDI.

Ganfeng has been increasing its capacity of battery-grade lithium carbonate and battery-grade lithium hydroxide since 2009. This strategic expansion matches the strong structural demand for lithium carbonate/lithium hydroxite due to the current boom in lithium battery sales in China. Lithium carbonate and lithium hydroxide are major raw materials for lithium batteries, whereas lithium metals are mainly for the primary lithium battery, pharmaceutical and other material industries. Consequently, lithium carbonate and lithium hydroxide prices almost tripled in 2015, while the price of lithium metal went up by c.100%. (See Figure 18 and Figure 19)

Figure 18: Price of lithium carbonate Figure 19: Price of lithium metal

Source: Deutsche Bank, Asian metal Source: Deutsche Bank, Asian metal

We believe that after a 40% YoY hike in 2015, the average price of lithium carbonate will experience a further 143% YoY increase in 2016 and remain high at RMB120,000/t/100,000/83,000/t in 2016/2017/2018. Although new supply is being incentivised into the market over the next 12 months (including Ganfeng’s own Mt. Marion), with another wave of spodumene being developed for potential market entry from FY18, most of the projects require incentive pricing to enter the market over the next two to three years. Figure 20 is the long-term lithium products price forecast.

9 May 2016

Metals & Mining

Ganfeng Lithium


Figure 20: Deutsche Bank price forecasts for lithium products


Cash cows: lithium metal Lithium metal remains a cash cow product for Ganfeng Lithium, providing more than 30% of revenue and gross profit before 2015. Lithium metal is widely used in various industries such as the primary battery, pharmaceutical, alloy, synthetic rubber and the military industries. We expect that downstream demand growth will remain slow at c.2-3%, similar to global GDP growth.

Technically, lithium metal manufacturing has a relatively high entry barrier due to its higher requirements regarding environmental protection and higher capability for dealing with dangerous goods (lithium metal is explosive; therefore, factories for producing lithium metal should be certificated by government). Considering the current slow growth of downstream demand and the relatively high entry barrier, we expect that capacity expansion for lithium metals will be very limited.

Ganfeng is a meaningful lithium metal provider in the world, claiming to provide 30% of global market share. Without significant new competitors, we believe that Ganfeng can maintain its current market share in lithium metal and create sustainable, strong cash flow and gross profit in the next several years.

The lithium metal price also went up significantly to c.RMB800,000/t. We estimate that gross profit from lithium metal significantly increased due to the rapidly enlarged spread. The high price of lithium carbonate in the next three years will not only raise the cost of lithium metal, but also make producing lithium metal less attractive, especially when raw material is in short supply. Therefore less supply of lithium metal is expected. After 2018, when supply/demand will be less tight and the lithium carbonate price may decline back to RMB80,000/t as we estimate, the gross profit margin of lithium metal operations could recover slightly. See Figure 21

9 May 2016

Metals & Mining

Ganfeng Lithium


Figure 21 Gross profit on lithium metal estimates

Source: Deutsche Bank, estimates, Company data

Raw material bottleneck will be released in 2H16

Ganfeng is unable to fully release its available capacity due to a shortage of raw material supply in the short/medium term. We expect that Ganfeng will gradually remove this bottleneck from the middle of 2016, hopefully enabling it to operate at full capacity by the end of 2016 or early 2017.

Diversified raw material supply, but supply remains tight in the short term Compared with other lithium compound processors, Ganfeng has the most diversified raw material resources supply. Major raw material suppliers are SQM (salt lake brine) and Talison (spodumene), domestic suppliers and the cyclical method. The cyclical method entails collecting scraps from Ganfeng’s own manufacturing process or purchasing it back from downstream users that use lithium as a catalyst but not as a raw material component. It is estimated that, in 2015, brine from SQM, spodumene from Talison, domestic suppliers and the cyclical method represented 35%, 35%, 15% and 15% of total raw material purchases, respectively. Figure 22 shows various production routes of lithium compound manufacture from raw material products, especially the complicated cyclical method. Nonetheless, Ganfeng faces a shortage of raw material supply in early 2016, as upstream raw material demand is strong. In 1H16, Ganfeng is running its capacity to produce lithium compounds for Albemarle at its OEM factory in China. We believe that this situation will not last very long once its Mt. Marion project starts to ramp up.

Figure 22: Estimated raw material

supply breakdown in 2015

Source: Deutsche Bank estimates, Company data

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Figure 23: Lithium products’ production routes from various raw material supplies


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Lithium battery manufacture

Good start and may have potential

New 18650 lithium battery factory planned Currently, Mbell’s products are mainly lithium energy batteries, not lithium power batteries, which are growing much faster. In April 2016, Ganfeng announced plans to build a new factory to produce 18650 lithium batteries (18650 is the mainstream lithium battery type in the industry, widely accepted by major downstream players such as Tesla) with a total capacity of 125m units (0.5-0.8Gwh). Although the scale of this lithium battery factory may not be big (total Chinese lithium battery sales were c.46Gwh in 2015), it is a good start for Ganfeng for expanding its position in the downstream, especially for lithium power batteries.

Mbell has limited potential to contribute gross profit We have a conservative outlook on Mbell’s contribution in the future, expecting that it will contribute only 6% of total gross profit in 2016.

In 1H15, Ganfeng completed the purchase of 100% of Mbell, a lithium battery producer. Mbell’s sales and NPAT in 2014 accounted for 34% and 39% of Ganfeng’s total sales and NPAT respectively before acquisition. Mbell’s capacity was 74.88mAh in 2014, with total production of 41.02mAh in 2014, implying only a 54.78% utilisation rate. Mbell’s lithium batteries are used for consumer electronics including tablets, smartphones and notebooks, the sales of which accounted for 59.84%, 14.83% and 3.64%, respectively, of total sales in 2014. Without seeing strong demand emerging from the above downstream area, we believe that Mbell may have limited potential to grow quickly in the next several years.

Although Mbell has promised to reach NPAT of RMB56m in 2016E, we worry about its ability to meet earnings targets. We expect that Mbell is likely to contribute only RMB100m of gross profit in 2016E, accounting for only 6% of Ganfeng’s total gross profit in that year. We do not expect a significant cost cut after the acquisition, because: 1) Mbell is not purchasing any raw material from Mbell but has to purchase from the midstream. Ganfeng is not involved or considered to be involved in midstream so far, as Ganfeng worries about becoming a competitor of its major client and losing the order; and 2) considering that Mbell is located in Shenzhen and Ganfeng is located in Jiangxi, we do not expect any significant synergy from SG&A to be created from this M&A.

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Financials

Non-public offering

Ganfeng announced a non-public offering in February. This non-public offering will issue a total number of shares outstanding not exceeding 38.36m (the current number of total outstanding shares is c.372.9mn). The exact number of shares to be issued will be determined by the board of directors and the sponsor (the lead underwriter) in accordance with the relevant regulations and the actual situation. This non-public offering will not cause a change in the company's controlling shareholders and actual controller.

The pricing benchmark is set at 90% of the share price for the previous 20 trading days (5 February 2016), or 38.29 RMB/share. The total funds raised are not expected to exceed RMB1,468m. The net proceeds after deducting issuance fees will be used for capital injection into three projects: 1) RIM Australia, expanding equity to 43.1%; 2) a new factory for type-18650 lithium-ion battery manufacture with an annual capacity of c.0.5-0.8Gwh; and 3) capacity expansion for a battery-grade lithium carbonate project with an annual output of 15,000 tons after construction.

Key assumptions for Ganfeng

Figure 24: Key assumptions for Ganfeng operations 2013 2014 2015 2016E 2017E 2018E

lithium compounds price New 39016 36821 49091 119494 100202 83210

Old

%Change 33% 143% -16% -17%

lithium metal price New 428018 445993 451326 715516 643965 618206

Old

%Change 1% 59% -10% -4%

lithium compounds cost New 34231 39545 39344 47213 48629 46198

Old

%Change -1% 20% 3% -5%

lithium metal cost New 314521 346537 343742 378116 378116 378116

Old

%Change -1% 10% 0% 0%

lithium compounds volume New 4000 5000 11200 11500 21000 21000

Old

%Change 124% 3% 83% 0%

lithium metal volume New 700 850 925 925 925 1000

Old

%Change 9% 0% 0% 8%Source: Deutsche Bank estimates

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Summary of financials

Key financials for Ganfeng

Ganfeng’s top line and bottom line will be significantly boosted by ASP, driven by booming EV sales and lead-acid battery replacement. We expect NPAT to increase from 125.2mn RMB in 2015 to 819.0mn RMB in 2016 (554% increase). In 2017, we expect the lithium compounds price to decrease 16% and lithium metal price to decrease 10% while the production costs remain the same. However, we expect the lithium compounds volume to increase 83% in 2017. Combining different factors, we expect NPAT to increase 41% in 2017.

Figure 25: Ganfeng’s P&L summary (RMB mn) 2014A 201EA 2016E 2017E 2018E

Revenue 869.5 1,353.9 2,587.6 3,594.0 3,479.1

COGS 686.5 1,064.7 1,451.1 2,091.9 2,215.9

Gross profit 182.9 289.3 1,136.5 1,502.1 1,263.2

SG&A 86.4 115.6 129.4 143.8 156.6

Investment income 3.6 1.4 0.0 50.9 39.0

Operating Profit (EBIT) 98.9 148.2 980.2 1,382.3 1,118.6

D&A 57.8 79.9 108.0 108.0 98.0

EBITDA 156.6 228.2 1,088.2 1,490.3 1,216.6

Net Finance expense 6.7 18.7 7.5 3.3 -5.8

Foreign exchange loss (gain) 1.2 6.5 1.0 1.0 1.0

PBT 101.3 149.9 993.0 1,399.4 1,144.9

Income tax 16.9 25.1 174.0 245.2 200.6

Effective tax rate 17% 17% 18% 18% 18%

PAT 84.4 124.8 819.0 1,154.2 944.3

NPAT 85.7 125.2 819.0 1,154.2 944.3

EPS 0.24 0.34 2.20 3.10 2.53

ROE 6% 7% 32% 33% 22%

PE 277.21 198.62 30.35 21.54 26.32

PB 17.14 13.20 9.62 7.02 5.74Source: Deutsche Bank estimates, Company data

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We expect Ganfeng’s net debt ratio will decrease going forward because of its improving profitability and cash from operation, mainly from lithium compounds processing business. We also forecast the Associates will start to increase, once the Mt. Marion projects ramp up and create profit in 2H16.

Figure 26: Ganfeng’s balance sheet summary (RMB mn) 2014A 2015E 2016E 2017E 2018E

Current Assets

Cash and equivalents 373.78 180.73 382.56 818.60 1,582.97

Account receivables 321.42 486.12 779.83 1,083.13 1,048.49

Inventory 329.10 313.15 437.33 745.06 789.23

Others 118.92 26.31 26.31 26.31 26.31

Total current assets 1,143.22 1,006.30 1,626.03 2,673.09 3,446.99

Non-current Assets

PP&E 657.20 733.91 715.91 697.91 689.91

Intangible 106.47 466.99 486.99 506.99 526.99

Associates 6.82 168.93 346.93 397.79 436.74

Other investments 1.48 27.28 27.28 27.28 27.28

Disposal of fixed assets 0.00 0.00 0.00 0.00 0.00

Others 39.27 124.13 124.13 124.13 124.13

Total non-current assets 811.23 1,521.25 1,701.25 1,754.11 1,805.06

Total Assets 1954.45 2527.55 3327.28 4427.20 5252.05

Current liabilities

ST borrowings 327.48 171.70 171.70 171.70 171.70

Account payable 148.58 271.51 370.07 515.81 546.39

Others 9.20 39.67 39.67 39.67 39.67

Total current liabilities 485.26 482.88 581.44 727.18 757.76

Non-current liabilities

LT debt 7.00 106.00 106.00 106.00 106.00

Others 74.41 55.49 55.49 55.49 55.49

Total non-current liabilities 81.41 161.49 161.49 161.49 161.49

Total liabilities 566.67 644.37 742.93 888.66 919.24

Share capital 356.50 377.81 372.90 372.90 372.90

Reserve 764.20 1,108.79 1,797.44 2,751.63 3,545.90

Others 302.22 414.01 414.01 414.01 414.01

Shareholders' equity 1,386.55 1,882.52 2,584.35 3,538.54 4,332.81

Minority interest 1.23 0.66 0.00 0.00 0.00

Total equities 1387.78 1883.19 2584.35 3538.54 4332.81

Total liabilities and equities 1954.45 2527.55 3327.28 4427.20 5252.05Source: Deutsche Bank estimates

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Cash flow from operations will be strong due to significantly improving lithium processing operation, especially the high price of lithium products. We did include potential non-public offering, which may significantly increase the cash from financing in 2016. The non-public offering may increase cash flow from operation by RMB1,468mn.

Figure 27: Summary of Ganfeng’s cash flow forecasts (RMB mn) 2014A 2015A 2016E 2017E 2018E

Cash flow from operation 11.11 365.97 607.69 796.90 1,063.32

Net profit 84.40 124.80 819.03 1,154.19 944.27

D&A 57.75 79.93 108.00 108.00 98.00

Changes in working capital -144.90 109.26 -319.34 -465.29 21.05

Cash flow from investment -205.60 -550.22 -288.00 -160.86 -148.95

Investment/associate -56.02 -387.94 -178.00 -50.86 -38.95

Capex -150.33 -131.34 -110.00 -110.00 -110.00

Disposals PPE& Intangible 1.60 1.61 0.00 0.00 0.00

Others -0.85 -32.56 0.00 0.00 0.00

Cash flow from financing 23.81 -16.85 -100.00 -200.00 -150.00

Equity raised 0.00 119.99 0 0 0

Borrowing 526.05 459.37 0 0 0

Payback -465.72 -532.32 0 0 0

Dividends -35.67 -51.51 -100.00 -200.00 -150.00

Foreign exchange -0.67 2.03

Net cash flow -171.35 -199.08 219.69 436.04 764.37

Cash beginning 533.3 362.0 162.9 382.6 818.6

Cash ending 361.95 162.87 382.6 818.6Source: Deutsche Bank estimates

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Appendix Figure 28: Geographical location of Ganfeng’s major assets


Key management and shareholders

Chairman and CEO: LI Liangbin Li Liangbin was born in 1967, holding a college degree, is a professorate senior engineer. He has worked in the lithium industry for over 20 years and has researched lithium chemicals technology on a long-term basis. With abundant practical experience in lithium chemicals, he has led the direction of product R&D since the establishment of Ganfeng. Throughout his career LI Liangbin has served as a technologist at Jiangxi lithium factory, an assistant engineer, an engineer, a director of the R&D centre and a factory director at Xinyu Ganfeng lithium factory. He was an executive director of Ganfeng from March 2000 to May 2007, a general manager from March 2000 to July 2006 and the chairman of the board since May 2007. Currently, Mr.LI is the president and chairman of the board of Ganfeng. He is also a director of RIM Australia.

Vice-chairman and Vice-president: Wang Xiaoshen WANG Xiaoshen, born in 1968, EMBA at CEIBS, master’s degree, economist. He has worked in marketing in the lithium industry for over 20 years and has a profound understanding of the global lithium industry. Throughout his career he has served as a manager’s assistant and a deputy manager at the Xinjiang

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branch of the China Nonferrous Metals Import and Export company and as a general manager and a director of Jiangsu Taihu Limited. Mr WANG served as a general manager at Ganfeng from July 2006 to December 2010 and has served as a director since May 2007. Currently, he is the vice-president and deputy chairman of the board of Ganfeng. He is also a director of International Lithium Corp Canada and of RIM Australia.

Figure 29: Shareholder structure

LI Liangbin李良彬

WANGXiaoshen王晓申

SHEN Haibo沈海博

LUO Shunxiang罗顺香

CAO Zhiang曹志昂

HUANG Wen黄闻

Jiangxi Ganfeng Lithium Inc

24.8% 9.26% 1.47% 1.3% 1.11% 1.05%

Fengxin Ganfeng Yichun GanfengTransporation company

GanfengInternational

Ganfeng Battery Jiangxi LithiumShenzhen Beit Electronics

Viewsonic New Resources

BLL Co.,International

LithiumMariana Brine

DepositBlackstairs

Spodumene mineRIM Co.,

100% 100% 100% 100% 100% 100% 100% 100%

55% 17.41 80% 51% 25%


Figure 30: Key milestones


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Mt. Marion

Ownership: Ganfeng (43%), Mineral Resources (43%) and Neometals (13%) The Mt. Marion lithium project is a greenfield project being developed through a joint venture between ASX-listed Neometals (NMT.AX, not covered), Mineral Resources (MIN.AX, $8.50/sh PT) and Jiangxi Ganfeng Lithium Co. Ltd (Insert ticker details), which is also the major offtake partner. NMT granted MIN and Ganfeng options pursuant to which they can elect to increase their respective shareholdings by acquiring shares from NMT at an agreed price. If these options are fully exercised, the effective ownership will be NMT (13.8%), MIN (43.1%) and Jiangxi Ganfeng Lithium Co. Ltd (43.1%).

The project is located 40km south-west of Kalgoorlie, Western Australia with construction currently underway. Annual production is planned to be 200ktpa of 6% Li2O chemical-grade spodumene concentrate (equivalent to 27kt lithium carbonate equivalent). However, the JV partners are also considering a further 80ktpa of 4% Li2O spodumene concentrate recovered via flotation.

Figure 31: Mt. Marion location map

Source: Neometals investor presentation, February 2016

Geology and Reserves & Resources The Mt. Marion lithium deposit was originally discovered in the 1960s by WMC, who commenced metallurgical testing of the ore for commercial purposes. The mineralisation is hosted within a number of sub-parallel, NE-NW trending pegmatite intrusive bodies which dip 10- 30° to the west. Individual pegmatites vary in strike length from 300m to 700m. The pegmatites intrude the mafic volcanic host rocks of the surrounding greenstone belt. The lithium occurs as 10-30 cm long spodumene crystals within medium grained pegmatites.

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A Mt. Marion resource expansion drill programme commenced in late 2015 in which up to 335 reverse circulation holes and 30 diamond holes will be drilled. The programme aims to extend the mine life through the extension and infill drilling of existing deposits as well as the definition of new resources from outcropping pegmatite prospects. The programme is expected to be completed in June 2016, with an upgraded Mineral Resource Estimate and Ore Reserve planned to be completed in the June and September quarters respectively.

Figure 32: Mt. Marion drill results, December 2015

Source: Company announcement, January 2016

Mining and Processing The Mt. Marion project will be a standard open-cut mining operation, employing traditional drill and blasting techniques and conventional load and haul methods using a small fleet of trucks and one or two small excavators. Life-of-mine strip ratios are expected to be 3:1. The pegmatite ore is harder than many other commercial ores, which is likely to lead to higher mining costs than similar-sized operations elsewhere in WA.

The processing plant is designed to have a nameplate capacity of 1.75Mtpa, however, we note the primary crusher is oversized (we believe closer to 6Mtpa), which will be beneficial if further expansions are pursued. The theoretical yield of the processing plant design based on Mt. Marion ore is 15-16%, however, the nameplate production rate of 200ktpa of 6% Li2O spodumene concentrate is conservatively based on an 11% yield.

The processing plant is expected to have three-stage crushing to produce a -6mm product, which liberates most of the spodumene, with all material then being passed to the Heavy Media Separation (HMS) circuit. The different specific gravities between spodumene and the gangue minerals allow separation to occur within cyclones, and no magnetic separation is required. Tantalum can be recovered from the spirals in association with the proposed addition of a flotation plant to recover the 4% Li2O concentrate (we believe around 27ktpa), however, it is not clear whether this will be extracted for commercial sale.

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The JV partners have announced that they will consider a second processing stream, with fines rejects material from the HMS circuit being fed into a flotation circuit to recover an extra 80ktpa of 6% Li2O spodumene concentrate. Tailings from the processing plant are planned to be deposited in an expired gold open pit nearby known as the Ghost Crab pit.

Figure 33: Mt. Marion planned site layout

Source: Company data

Capital and operating costs Initial project capital is estimated at A$50m, with the construction being conducted by MIN under a build/own/operate model. MIN will levy a monthly capital recovery charge in addition to operating costs based on quantity processed to operate the asset on behalf of the JV. Product will be trucked to Kwinana during the early stages of ramp-up; however, it will transition to Esperance as volumes increase.

Offtake Ganfeng will purchase 100% of spodumene production from the Mt. Marion lithium project for the life of the mine (LOM) at market prices on a CIF basis, subject to an agreed pricing floor. After the first three years of production, MIN and NMT can exercise options to collectively purchase up to 51% of the spodumene concentrate from the JV, with Ganfeng retaining offtake rights for the remaining 49% of output.

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Appendix 1

Important Disclosures Additional information available upon request Disclosure checklist

Company Ticker Recent price* Disclosure

Ganfeng Lithium 002460.SZ 67.60 (CNY) 6 May 16 NA *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Otherinformation is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=002460.SZ Analyst Certification

The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. James Kan

Historical recommendations and target price: Ganfeng Lithium (002460.SZ) (as of 5/6/2016)

0.00

10.00

20.00

30.00

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Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16

Sec

uri

ty P

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Previous Recommendations

Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating

Current Recommendations

Buy Hold Sell Not Rated Suspended Rating

*New Recommendation Structure as of September 9,2002

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Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock.

Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock

Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell.

Newly issued research recommendations and target prices supersede previously published research.

54 %

36 %

10 %17 % 16 % 17 %0

50100150200250300350400450500

Buy Hold Sell

Asia-Pacific Universe

Companies Covered Cos. w/ Banking Relationship

Regulatory Disclosures

1.Important Additional Conflict Disclosures

Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

2.Short-Term Trade Ideas

Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the SOLAR link at http://gm.db.com.

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Additional Information

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Metals & Mining

Ganfeng Lithium


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