TLC(002466) HTSC·2024-10-31 07:55Investment Rating - The report maintains an "Accumulate" rating for Tianqi Lithium Industries (9696 HK/002466 CH) with a target price of HKD 30.20 and RMB 39.75 [9][10]. Core Insights - The company's Q3 performance was pressured by falling lithium prices, reporting revenue of RMB 3.646 billion, a year-over-year decline of 57.48% and a quarter-over-quarter decline of 4.90%. The net profit attributable to shareholders was a loss of RMB 496 million, down 130.11% year-over-year but up 62.14% quarter-over-quarter [3][4]. - For the first three quarters of 2024, the company achieved revenue of RMB 10.065 billion, a year-over-year decline of 69.87%, with a net loss of RMB 5.701 billion, down 170.40% year-over-year. The Q3 results aligned with the company's prior loss forecast of RMB 5.85 to 5.45 billion [3][4]. - The company is experiencing production and sales growth both year-over-year and quarter-over-quarter, with lithium compound and derivative sales increasing by 67.71% year-over-year and 24.69% quarter-over-quarter in Q3 [4]. Summary by Sections Performance Overview - Q3 revenue was RMB 3.646 billion, down 57.48% year-over-year and 4.90% quarter-over-quarter. The net loss was RMB 496 million, reflecting a year-over-year decline of 130.11% but an increase of 62.14% from the previous quarter [3]. - For the first three quarters of 2024, total revenue reached RMB 10.065 billion, down 69.87% year-over-year, with a net loss of RMB 5.701 billion, down 170.40% year-over-year [3][4]. Production and Sales Growth - The company reported production and sales growth in lithium compounds and derivatives, with sales increasing by 67.71% year-over-year and 24.69% quarter-over-quarter in Q3 [4]. - High-priced inventory is gradually being consumed, and production costs are aligning with the latest procurement prices, leading to a reduction in quarterly losses [4]. Capacity Expansion - Ongoing projects are progressing smoothly, including the third phase of the Talison chemical-grade lithium concentrate expansion project, expected to produce its first batch of lithium concentrate by Q4 2025 [5]. - The company has received pre-approval for the construction of the Tebaigou tailings project, laying the groundwork for future expansion [5]. Market Outlook - The report anticipates continued oversupply in the lithium market due to the expansion of large, low-cost mines. However, the pricing of lithium concentrate is nearing the cost lines of Australian mines, which may lead to a potential reduction in production if prices remain low [6]. - The report suggests that the lithium market may continue to experience fluctuations as it awaits the clearing of overseas mines [6]. Valuation and Forecast - The report adjusts lithium price assumptions and forecasts EPS for 2024-2026 at -2.50, 1.50, and 2.58 RMB, respectively. The company is assigned a 1.4x PB for 2025, with a BPS of 28.39 RMB [7]. - The average premium rate for the company over the past three months is 43.21%, with a target price of HKD 30.20 and RMB 39.75 based on the exchange rate as of October 30, 2024 [7].