The stock price hits a new 3-year high! This lithium company's analyst gives a buy rating.

By Hui Kai | Edited by Cheng Cheng

Shengxin Lithium Energy’s 2025 performance resulted in a loss; this outcome runs counter to the industry’s overall recovery trend. Nevertheless, analysts remain optimistic about the company’s future performance.

In 2025, the lithium industry improved overall, and several leading companies achieved profitability. However, Shengxin Lithium Energy continued to record losses. Its full-year attributable net profit was -888M yuan, with the year-over-year loss widening. Compared with peers such as Ganfeng Lithium and Tianqi Lithium, whose results improved significantly, Shengxin Lithium Energy faces challenges in R&D spending, staffing, and cost control. Still, it has been stepping up its plans for lithium ore development. It also received analysts’ upward adjustments to its future profit expectations, and its share price hit a new high in recent years.

A loss of 888M yuan in 2025

On March 28, Shengxin Lithium Energy (002240.SZ) released its annual report. In 2025, it recorded revenue of 5.06B yuan, up 10.54% year over year. Attributable net profit was -888M yuan, with a widened loss of 42.87% year over year. After deducting non-recurring items, attributable net profit was -812 million yuan, with the loss narrowing by 9.48% year over year.

In its annual report, Shengxin Lithium Energy said that in 2025, battery-grade lithium carbonate showed a clear cyclical pattern. In the first half of the year, affected by the industry cycle downturn, the price of battery-grade lithium carbonate fell from 75k yuan per ton at the start of the year to around 60k yuan per ton by the end of June. In the second half, against the backdrop of “anti-overheating competition,” lithium carbonate prices continued to rebound. By the end of December 2025, battery-grade lithium carbonate had risen to 119k yuan per ton. According to Wind data, the GFEX lithium carbonate futures price rose 53.72% in 2025; as of April 2, the increase since 2026 began was over 31%.

The Wind CITIC Securities lithium sector has seven A-share companies. Of these, four have disclosed their 2025 annual reports. Except for Shengxin Lithium Energy showing a loss, the other three companies’ performance generally increased. Among them, the industry leader Ganfeng Lithium still had an attributable net profit loss of 75k yuan in 2024. In 2025, it turned to profit with a substantial gain of 60k yuan. Tianqi Lithium had a loss of 7.9 billion yuan in 2024, and attributable net profit turned to profit at 462 million yuan in 2025. Rongjie Co., Ltd. had profits of 215 million yuan in 2024 and 279 million yuan in 2025, up 30% year over year.

Public information shows that Shengxin Lithium Energy’s general manager is Deng Weijun, who has experience working in investment banking. Public information also shows that prior to joining Shengxin Lithium Energy, he served as a senior manager in the investment banking business unit of Southwest Securities and as a business director in the investment banking business unit of Great Wall Securities. Since taking the position of general manager of Shengxin Lithium Energy in 2020, the company’s performance was outstanding in 2021–2022. However, in 2023, its attributable net profit fell by more than 80% year over year. Since 2024, it has recorded losses for two consecutive years.

In its 2025 annual report, Shengxin Lithium Energy stated, “In view of the fact that the company’s performance in fiscal year 2025 resulted in losses, and in light of its own strategic development plan, to ensure the company’s continued, stable, and healthy development and better protect the long-term interests of all shareholders, especially minority shareholders, the company plans for fiscal year 2025 not to distribute cash dividends, not to issue bonus shares, and not to increase share capital from capital reserve funds.” As of this point, Shengxin Lithium Energy has not implemented any cash dividend for two consecutive years.

Multiple factors affect profit performance

In addition to product price fluctuations, factors such as financial and management expenses growth have also had some impact on the company’s net profit.

In terms of financial expenses, according to information disclosed in the annual report, the company’s financial expenses in 2025 were 410 million yuan. Compared with 200 million yuan in 2024, that is a doubling. Among them, foreign exchange losses from translating overseas assets and liabilities were 218 million yuan, which was a major driver behind the increase in financial expenses. For management expenses, Shengxin Lithium Energy had intermediary and disclosure expenses of 20.66 million yuan in 2024, while this figure rose to 47.5 million yuan in 2025, up approximately 130% year over year.

In addition, Shengxin Lithium Energy’s office expenses also increased significantly. Office expenses were 13.5 million yuan in 2024 and reached 23.07 million yuan in 2025, an increase of more than 70%.

In recent years, Shengxin Lithium Energy’s asset-liability ratio has kept rising, increasing from 29.48% at the end of 2022 to 48.36% at the end of 2025. Over the same period, the company’s asset liquidity tightened continuously. The current ratio fell from 2.96 in 2022 to 0.85 in 2025, and the quick ratio fell from 2.28 in 2022 to 0.6 in 2025.

There is significant room to increase R&D investment

In its annual report, Shengxin Lithium Energy said that technical advancement is one of the company’s core competitive advantages. Its lithium salt project team has extensive experience in R&D of lithium salt products, production management, and deep professional foundation. It has mastered industry-leading technical processes and has “focused on strengthening process, technology, and R&D work, and continuously reinforcing its technical accumulation in ultra-thin and ultra-wide lithium strips.”

However, compared with the company’s strategic vision of “committing to becoming a global leading enterprise in lithium battery new energy materials,” its R&D spending proportion is not high. According to the company’s financial statements, R&D expenses increased from 6.72 million yuan in 2024 to 11.23 million yuan in 2025, up 67%. But R&D expenses as a proportion of total revenue were only 0.2%.

Among the seven listed companies in the CITIC Securities lithium sector, in the first three quarters of 2025, Shengxin Lithium Energy ranked last among the seven with R&D expenses of 7.53 million yuan. From the perspective of R&D intensity (R&D expenses/total revenue), in the first three quarters of 2025, Shengxin Lithium Energy’s R&D intensity was only 0.2%, also placing it at the bottom among the seven companies. By contrast, the industry leader Ganfeng Lithium (002460.SZ) had R&D expenses of 729 million yuan in the first three quarters of 2025, equivalent to 5% of 119k yuan in revenue over the same period. R&D intensity for Yongxing Materials (002756.SZ), Rongjie Co., Ltd. (002192.SZ), and MinMet Resources (002738.SZ) also reached 3.77%, 1.49%, and 1.41%, respectively, in the first three quarters of 2025.

According to Wind data, at the end of 2024, Shengxin Lithium Energy had 34 R&D personnel. R&D personnel accounted for 0.7% of total employees. This number and percentage place it at the bottom among the seven companies in the CITIC Securities lithium sector. At the end of 2024, Yongxing Materials had 359 R&D personnel during the same period, representing 15.21% of total employees; Ganfeng Lithium had 1,919 R&D personnel, representing 11.66% of total employees.

Shengxin Lithium Energy’s 2025 annual report shows that the company’s R&D personnel increased to 42, accounting for 0.8% of total employees. This figure is still at the low end of the industry, indicating that there is still substantial room for improvement in building the company’s R&D team. In response, this publication has contacted the company’s secretary’s office through email and other means; as of the time of publication, no reply has been received.

Capital increase in a subsidiary of 2.2 billion yuan

Analysts raise earnings expectations

Despite continued losses, Shengxin Lithium Energy continues to step up its lithium ore business. Deng Weijun, the company’s general manager, said, “Over the next 3 to 5 years, we will focus on finding ore on a global scale. For example, if our Muirong lithium mine in Ganzi Tibetan Autonomous Prefecture, Sichuan can be brought into production within 3 to 5 years, it could roughly solve the raw-material issues for all of the company’s production capacity in Sichuan, and the cost would be relatively low.” In overseas markets, the company will focus on mining resources in countries such as Zimbabwe, Nigeria, and Argentina. This may be the company’s most core work over the next 3 to 5 years, or even the next 5 to 10 years, and it also constitutes the company’s core competitiveness.

Shengxin Lithium Energy recently issued an announcement stating that, based on the operating and development needs of its wholly owned subsidiary Shengtun Lithium Industry, in order to further strengthen Shengtun Lithium Industry’s financial strength and optimize its capital structure, the company plans to increase capital to Shengtun Lithium Industry by 2.2 billion yuan through the use of its own funds and a debt-to-equity conversion. Of this, 1.15 billion yuan will be included in registered capital and 1.05 billion yuan will be included in capital reserves. After completion of this capital increase, Shengtun Lithium Industry’s registered capital will increase from 1.8 billion yuan to 2.95 billion yuan.

The main assets of Shengtun Lithium Industry are its controlling subsidiary Oino Mining. The latter mainly engages in the mining, processing, and sales of spodumene ores and lithium concentrate. The 2025 annual report shows that Oino Mining’s performance was not good. In 2025, revenue was 365 million yuan and net profit was -4.73 million yuan. As of the end of 2025, Oino Mining’s net assets were 642 million yuan, down compared with 648 million yuan at the end of 2024.

The annual report also disclosed that in 2026, Shengxin Lithium Energy will “concentrate resources to ensure stable and efficient production” of projects including the Oino Mining project in Sichuan. In February 2026, Shengtun Lithium Industry will spend 1.26 billion yuan in cash to acquire a 13.93% equity interest in Yajiang County Huirong Mining Co., Ltd. After the transaction is completed, the listed company will hold 100% of Huirong Mining. Huirong Mining’s core asset is the Muirong lithium mine. Currently, the pre-construction preparation work for the Muirong lithium mine has basically been completed. Large-scale construction will soon begin. “The company will fully advance the development and construction of the Muirong lithium mine.”

Regarding Shengxin Lithium Energy, analysts Dong Wu Securities, including Deng Hong and Ruan Qiaoyan and Yue Siyao, noted in their review report on the 2025 annual report that, considering that from 2026 to 2027 the lithium supply-and-demand landscape will continue to improve and that rising lithium prices will drive improved corporate profitability, the Oino Mining and other assets under the company are expected to approach full production in 2026, while the capacity ramp-up for the Muirong ore will continue. They expect Shengxin Lithium Energy’s future performance to improve, and they raised their forecast for Shengxin Lithium Energy’s attributable net profit in 2026–2027 from 550 million yuan and 1.0 billion yuan to 2.08 billion yuan and 2.52 billion yuan, giving a “Buy” rating.

Worth noting is that, as lithium carbonate prices have continued to rise since the second half of last year, Shengxin Lithium Energy’s share price has also been setting new highs continuously. Statistics show that between July 1, 2025 and April 1, 2026, Shengxin Lithium Energy’s share price rose 206.13%. On February 25, the intraday share price of 46.18 yuan also set a new share price high since December 2022.

(This article was published in the April 4 issue of Securities Market Weekly. The individual stocks mentioned are only for illustrative analysis and do not constitute investment advice.)