Lady and Gents of this marvelous sub reddit.
Most of us know the risk of investing our hard earn money in enterprises of our East Asian nemesis, China. But today I'd like to show you the following company, which personally I think has some potential.
Ganfeng Lithium
Why do I like the stock? It because of the following:
- High current asset ( 887 million USD)
- Moderate debt amount (882 million USD)
- Rising earning (rising spot price of lithium)
- Steady P/CF ratio (2,14%)
Opinion:
It's nice to see that they have plenty of assets to cover all of their liabilities. It's shows that the company is really health and has the capability to use some leverage in the future. The rising spotprice of lithium that is driven by the electrification of automobile is thriving the demand of lithium. Furthermore, the market their is capital intensive, meaning that they can expect to many new competitors. Especially in times where interest rates are high.
What I don't like about the company it the price to cashflow ratio is pretty low. Normally I would accept a ratio higher than 10%. But with rising spot prices on the lithium market this could change really quick. There has been a growth over 200% between Q1 2022 and Q1 2021. Furthermore we shouldn't forget that this is a Chinese company, meaning there will be issues with the US.
Overall opinion: If you like to speculate on higher commodity prices, then Ganfeng might just be a great company.
note: if you like this post and you would like me to analyses more companies, send me a dm
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