Salt Lake Lithium's profit doubles but stock slumps; investors demand buybacks and dividends

By Hu Yawen, Beijing | September 23, 2026

At a performance briefing held on September 23, topics such as "market value management," "share buybacks," and "greater information transparency" dominated questions directed at Salt Lake Industry Co., Ltd. (000792.SZ). In the first half of 2026, the company posted a net profit of 6.169 billion yuan. Its gross margin on lithium carbonate reached 83.46%, significantly higher than the lithium compound and derivative margins of Tianqi Lithium and Ganfeng Lithium. The company's potash fertilizer gross margin also exceeded 60%.

Despite these strong figures, the market has not recognized Salt Lake Shares as a high-growth leader in the lithium sector. As of September 24, the company's trailing price-to-earnings (P/E) ratio stood at just over 10x, while its share price had fallen to 23.7 yuan per share—a clear divergence from its earnings trajectory. On investor interaction platforms, one shareholder remarked, "The recent continuous decline in the stock price completely contradicts the company's actual value and operating performance," and pressed the company on "why it has not adopted a buyback approach to manage market value." In response to these queries, a representative of Salt Lake Shares told China Times that they needed to confirm the status of replies with relevant colleagues.

Earnings and Share Price Diverge

According to estimates by Guolian Minsheng Securities, after Salt Lake Shares consolidates Minmetals Salt Lake in 2026, the company's annual lithium carbonate production capacity will increase to 98,000 tons, with further reductions in production costs. In the first half of this year, Salt Lake Shares sold lithium carbonate at an average price of 143,000 yuan per ton, while its production cost was only 24,000 yuan per ton. During the same period, the gross profit from both lithium salts and potash fertilizer exceeded 4 billion yuan each, and net profit doubled year-on-year to 6.169 billion yuan.

However, the market has not responded favorably. In April 2026, Salt Lake Shares closed at 39.29 yuan per share. Since then, the stock has been on a downward trajectory, falling 21.68% in May and 9.51% in July. As of September 24, the stock had dropped nearly 16% in September alone. Investors have seen the company's performance improve, but the share price continues to slide. Consequently, more shareholders are asking about market value management and dividend policies.

Company management did not directly address the reasons for the valuation compression during the performance briefing, but the company has not remained silent. Throughout 2026, Salt Lake Shares has repeatedly outlined its management measures on investor platforms. Specific actions since last year include: share cancellation and buybacks, stake increases by the actual controller, acquisition of high-quality lithium assets, and the commissioning of a 40,000-ton-per-year lithium salt project. The company has stated, "The capital market is affected by multiple factors including industry cycles and market conditions, and price fluctuations are objective. Going forward, the company will continue to deepen its core potassium and lithium businesses, focus on production operations, technological innovation, and resource expansion, and strive to reward investors with solid development results."

Investors, however, remain dissatisfied, arguing that these "multi-pronged measures" are too vague and lack quantifiable, trackable execution plans. As the stock price continues to fall, some investors are still asking why the company does not directly adopt buybacks to manage market value, and what the specific implementation status of the company's market value management system is.

Shareholders Push for Dividends

As of the end of June, Salt Lake Shares held approximately 32.3 billion yuan in cash on its balance sheet, with a debt-to-asset ratio of 14.07%. The company has publicly stated that its "operating cash flow is ample and stable," but has not directly answered why there are no new buyback plans. A more prominent issue is the absence of dividends. The company explained that because the parent company's retained earnings have not yet fully turned positive, it does not yet meet the statutory conditions for cash dividends. Although the company has revised its Articles of Association and established a Profit Distribution Management System and a Market Value Management System, the substantial shareholder returns that investors expect have yet to materialize.

In the past, Salt Lake Shares faced operational difficulties due to failed diversified investments and was once suspended from trading. At that time, the company's nearly 30-billion-yuan investment in a magnesium metal integration project incurred continuous losses, leading to heavy debt burdens and restructuring of related subsidiaries. In 2017, the company's net profit plummeted; it posted a loss of 3.447 billion yuan in 2018 and a massive loss of 45.86 billion yuan in 2019.

According to Wind data, Salt Lake Shares has not paid dividends since 2017. From 2019 to 2025, the company's retained earnings remained negative, though the loss amount gradually narrowed. In the first half of 2026, retained earnings turned positive, reaching 4.564 billion yuan. Liu Zhigeng, a well-known financial and tax expert and senior certified public accountant, told China Times, "On the issue of dividends, although major shareholders may dominate decision-making, minority shareholders also have rights to participate and supervise. Dividend decisions are typically made by the shareholders' meeting or the board of directors. The shareholders' meeting must review and approve specific dividend plans, ensuring they meet statutory conditions and obtain approval from a majority of shareholders."

Lingering Competition Concerns

A change in controlling shareholder and management team has also been a major shift for Salt Lake Shares in recent years. After China Minmetals Corporation (hereinafter "China Minmetals") took control of Salt Lake Shares, Lei Zhigang became the company's general manager in June 2026. Born in 1972, Lei comes from the Minmetals system and is not part of Salt Lake Shares' original management team. From December 2018 to April 2023, he served as Deputy Party Secretary of Changsha Mining and Metallurgy Research Institute Co., Ltd.; from April 2023 to June 2026, he served as Deputy Party Secretary and Director of Hunan Nonferrous Metals Holding Group Co., Ltd.

In 2026, Minmetals Salt Lake, previously controlled by China Minmetals, was consolidated into Salt Lake Shares. However, the lithium carbonate assets under Qinghai Huixin remain an unresolved issue of horizontal competition—a corporate governance flaw that has drawn increasing market attention. Investors have repeatedly questioned, "Qinghai Huixin is using Salt Lake Shares' resources, so why not directly acquire it?"

After a look-through of the equity structure, China Minmetals is the actual controller of Qinghai Huixin. In 2025, Qinghai Huixin completed and commissioned a 20,000-ton-per-year lithium carbonate production facility, giving it actual lithium carbonate production capacity and allowing it to sell lithium products to the market, just like Salt Lake Shares. More critically, the brine required for its production is supplied by Salt Lake Shares at market prices. This means Salt Lake Shares is selling core raw materials to a competitor, which then uses those materials to produce lithium carbonate—creating a horizontal competition relationship between the two parties.

In June of this year, Salt Lake Shares stated that the actual controller and controlling shareholder had made clear commitments regarding horizontal competition, and that the company would actively promote related work. It added that there were currently no material adverse horizontal competition situations affecting production and operations. According to public information, China Minmetals has committed to resolving the horizontal competition issue by January 14, 2030—leaving about three years before the deadline.

However, judging from this performance briefing, the relatively formulaic responses have not alleviated investor concerns. Shareholders are more interested in whether the company has phased, specific arrangements, and whether it can provide substantive signals that would prompt the market to reassess the company.

(Source: China Times)