Ganfeng, China’s largest lithium salts producer, is under probe for suspected insider trading

  • Probe into Ganfeng Lithium’s trading in an undisclosed listed company started in January and company was only notified of the case on Friday: filing
  • China’s market watchdog CSRC launched 201 probes into suspicious insider trading activity last year, a 25 per cent jump over 2020

Ganfeng Lithium, the world’s third largest and China‘s largest producer of lithium salts, said it is facing an investigation by the nation’s securities market regulator for suspected insider trading, cautioning investors of risks in buying its shares.

The China Securities Regulatory Commission (CSRC) officially started probing suspicious wrongdoings on January 24 in relation to the company’s buying and selling of an undisclosed mainland-listed stock in the secondary market, Ganfeng said in a Shenzhen exchange filing on Sunday. It was only informed of the case on Friday, it added.

Its daily operations are not affected by the probe, the company said. Ganfeng, based in eastern Jiangxi province, counts Tesla and BMW among its customers.

The CSRC conducted 201 investigations into suspicious insider trading cases last year, up 25 per cent on year, according to official data. Over the past two years, authorities have strengthened its resolve to weed out market manipulations, falsified earnings and other corporate malfeasance, while tackling anti-monopoly practices among internet-platform operators.

“Given the rapid growth of electric vehicle sector in China, investigation into Ganfeng, a major supplier of lithium salts to make batteries, will attract analysts and traders’ close attention,” said Ivan Li, a fund manager with Shanghai-based Loyal Wealth Management. “The company’s long-term growth prospects remains good.”

Demand for lithium salts surged in recent years amid a fast penetration of electric vehicles in China.

Sales of new-energy vehicles (NEVs), which comprise pure electric, plug-in hybrid and hydrogen fuel-cell cars, are expected to jump 84 per cent to 5.5 million units this year from a year ago, according to forecast by the China Passenger Car Association.

Ganfeng’s annual production capacity for lithium salts is projected to surge to 320,000 tonnes by 2025, from 120,000 tonnes last year, according to an April 13 report by Zhou Xuhui, an analyst at the Shanghai-based brokerage Eastmoney Securities.

In the first quarter of this year, the company reported a net profit of 3.1 billion yuan (US$462.6 million), more than 10 times its earnings of 293.7 million yuan in the same period last year. Revenue grew 233 per cent to 5.36 billion yuan.

Author: Daniel Ren, SCMP

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