Salt Lake Industry's Profit Doubles but Stock Falls; Investors Demand Buybacks and Dividends

By Hu Yawen, reporting from Beijing

At a September 23 performance briefing, Salt Lake Industry Co., Ltd. reported net profit of 6.169 billion yuan. The company highlighted its lithium carbonate business, gross margins on lithium compounds and derivatives, and its potash operations, drawing comparisons with peers such as Tianqi Lithium and Ganfeng Lithium.

However, the market has not embraced Salt Lake Industry as a high-growth lithium sector leader. 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 had not adopted share buybacks to manage market valuation. In response to multiple inquiries, a Salt Lake Industry representative told China Times that they needed to confirm the status of replies with relevant colleagues.

Earnings and Share Price Diverge

According to Guolian Minsheng, the company's potash gross profit exceeded 4 billion yuan, while net profit for the first half of the year doubled year-on-year to 6.169 billion yuan.

Yet the market remained unimpressed. At the end of April 2026, Salt Lake Industry's shares closed at 39.29 yuan. Since then, the stock has fallen steadily — down 21.68% in May, 9.51% in July, and nearly 16% in September as of September 24. Investors who had waited for improved earnings now find themselves watching the share price decline, prompting a growing number of shareholders to question the company about its market value management and dividend policies.

Company management did not directly address the reasons for valuation pressure during the performance briefing, but the company has not been silent. In 2026, Salt Lake Industry repeatedly outlined its management measures on investor platforms, including: share cancellation and buybacks, insider share purchases 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 stated, "The capital market is affected by multiple factors including industry cycles and market conditions; price fluctuations are objective. Going forward, the company will continue to focus on its core potassium and lithium businesses, and prioritize production operations, technological innovation, and resource expansion to deliver solid returns to investors."

However, investor dissatisfaction stems from the perception that these "multi-pronged measures" are described in overly general terms, lacking quantifiable and trackable execution plans. As the stock price continues to fall, some investors are still asking: Why doesn't the company directly adopt share buybacks to manage market value? What is the specific implementation status of the company's market value management system?

Shareholders Call for Dividends

As of the end of June, Salt Lake Industry held approximately 32.3 billion yuan in cash on its balance sheet, with a debt-to-asset ratio of 14.07%. The company has 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 substantive shareholder returns that investors expect have yet to materialize.

In the past, Salt Lake Industry faced operational difficulties due to failed diversification 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 sustained losses, leading to heavy debt burdens and restructuring of related subsidiaries. In 2017, net profit plummeted; in 2018, the company posted a loss of 3.447 billion yuan; and in 2019, a massive loss of 45.86 billion yuan.

Wind data shows that Salt Lake Industry has suspended dividends since 2017. From 2019 to 2025, the company's retained earnings remained negative, though the deficit gradually narrowed. In the first half of 2026, retained earnings turned positive, reaching 4.564 billion yuan. Liu Zhigeng, a well-known tax and audit 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 board of directors. The shareholders' meeting must review and approve specific dividend plans, ensuring they meet statutory conditions and obtain majority shareholder approval."

Lingering Competition Concerns

A change in controlling shareholder and management team has also marked recent years for Salt Lake Industry. After China Minmetals Corporation took control, Lei Zhigang became general manager in June 2026. Born in 1972, Lei comes from the Minmetals system, not from Salt Lake Industry's 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 worked at Hunan Nonferrous Metals.

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

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

In June of this year, Salt Lake Industry stated that the actual controller and controlling shareholder had previously 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 until 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)