After its stock price more than doubled effortlessly, Chengxin Lithium Group Co., Ltd. (002240) recently hit two consecutive limit-down plunges, sparking widespread market attention over its rollercoaster-like performance.
Despite reporting improved third-quarter results, Chengxin Lithium faces market expectations of significant annual losses due to substantial losses in the first three quarters of the year. Against this backdrop, the rapid pullback following its price surge has become a focal point of debate—whether it signals a "technical correction" or a "bubble burst."
**Market Debate Over "Bubble"** With a net loss of RMB 621 million in 2024 and another RMB 752 million loss in the first three quarters of 2025, Chengxin Lithium’s poor financial performance has not deterred its stellar stock market run. This year, the stock surged nearly fourfold at its peak, doubling in just a month before the recent crash.
On the secondary market, Chengxin Lithium’s stock began a steep decline in early April, bottoming at RMB 10.62 before gradually rebounding. From June to October, it maintained a step-like upward trend, entering a rapid rally in late October. After breaking through resistance on October 23, the stock accelerated, peaking at RMB 41.93 by November 20—doubling in less than a month. However, the celebration was short-lived as the stock abruptly plunged into two limit-down sessions, accompanied by sharply reduced trading volume and weakened investor interest.
Some market observers argue that the company’s weak fundamentals cannot justify such gains, labeling the crash a "bubble burst." Others, however, point to Chengxin Lithium’s return to profitability in Q3 as evidence of improving fundamentals, suggesting the sell-off may be temporary.
**Financial Performance** In the first three quarters of 2025, Chengxin Lithium reported revenue of RMB 3.095 billion, down 11.53% YoY, with a net loss of RMB 752 million. However, Q3 alone saw revenue jump 61.07% to RMB 1.481 billion and net profit swing to RMB 88.72 million, up 132.3% YoY—marking its first quarterly profit in eight quarters.
**Capital Market Moves** Chengxin Lithium recently scrapped its Hong Kong IPO plan while launching a private placement to raise RMB 3.2 billion for working capital and debt repayment. Analysts note that while the IPO aimed to advance global strategy, the company’s immediate priority is shoring up its finances amid persistent losses.
The private placement targets strategic investors, including parent company Shengtun Group, CALB, and Huayou Cobalt, to strengthen industry collaboration. Chengxin Lithium operates in the upstream lithium sector, with annual capacities of 137,000 tons of lithium salts and 500 tons of lithium metal. However, falling lithium prices have directly pressured its profitability.
**Earnings Forecasts Slashed** Despite Q3 improvements, analysts widely expect Chengxin Lithium to post heavy annual losses. Everbright Securities revised its 2025 net loss forecast to RMB 500 million, while East Money Securities adjusted its projection to a RMB 600 million loss, citing impairment impacts. Both firms, however, raised 2026–2027 profit estimates on anticipated lithium market recovery.
Chengxin Lithium has also ventured into solid-state battery materials, with ultra-thin lithium strips already in production, positioning for long-term growth despite near-term headwinds.
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