Hua Er Jie Jian Wen·2026-01-09 03:23Group 1 - Morgan Stanley downgraded the ratings of Tianqi Lithium and Xingyuan Material from "overweight" to "market weight" due to current valuations being fully priced in for profit recovery expectations from the industry reversal [1][2] - For Tianqi Lithium, the target price was raised to 49 yuan, with the current stock price at 44 yuan per share. The projected average price for lithium hexafluorophosphate (LiPF6) in Q4 2025 is over 100,000 yuan/ton, and the net profit per ton of electrolyte is expected to reach 4,000 yuan, indicating a payback period of less than one year [1][2] - Xingyuan Material's target price remains at 16 yuan, but the stock is considered "at target" due to its sales growth guidance of approximately 30%, which lags behind the industry average expected growth of 35%-40% for 2026 [1][3] Group 2 - The report indicates a shift in valuation methodology from a growth-oriented P/B approach to a cycle-oriented P/E approach, reflecting concerns over potential supply expansion and competition due to short payback periods [4][5] - The report highlights that the top three LiPF6 producers in China, including Tianqi, have significant production capacity that can be released, with an expected addition of 80,000 tons of capacity by the second half of 2026, representing about 20% of total industry capacity [2][5] - The report emphasizes that while high profits are being realized, the industry may be at a cyclical peak, with concerns that any demand weakness or capacity expansion could lead to a return to mid-cycle pricing levels [5][7]