2025-09-01 03:21Summary of Tianqi Lithium Conference Call Company Overview - Company: Tianqi Lithium (9696.HK) - Industry: Lithium production and chemicals - Current Price: HK$40.66 - 12-Month Price Target: HK$21.50 - Downside Potential: 47.1% Key Financial Highlights - 1H25 Net Profit: Rmb87 million, EPS of Rmb0.053 per share, compared to a net loss of Rmb5.20 billion in 1H24 [1] - Recurring Net Loss: Rmb209 million, improved from Rmb3.07 billion in 1H24 [1] - Interim Dividend: Nil for 1H25, same as last year [1] - Market Capitalization: HK$66.7 billion [6] - Enterprise Value: HK$84.0 billion [6] Earnings Estimates Revision - Earnings Estimates: Revised down by 6-48% for 2025-27E due to higher minorities, partially offset by higher gross profit from lithium ore and chemicals [2] - Gross Profit (GP) Estimates: Revised up by 4-15% for 2025-27E [22] Industry Insights - Lithium Pricing: Recent supply disruptions in China are expected to support spot lithium carbonate prices above current domestic marginal costs [2] - Global Supply Risks: The risk on current spot prices, which are 39% above the bottom in June, is viewed as downside due to excess global capacity [2] - Valuation Analysis: Bottom-of-the-cycle valuation suggests a theoretical valuation of Rmb16.0 per share at US$10.5k/t-LCE, or Rmb20.8 per share at US$16.0k/t-LCE [2][34] Revenue Breakdown - Lithium Ore: Contributed 67% of total gross profit; revenue down 7% YoY but 17% above estimates [23] - Lithium Compounds: Contributed 33% of total gross profit; revenue decreased by 36% YoY, inline with estimates [24] Operational Metrics - Operating Cash Flow: Rmb1.82 billion in 1H25, down 19% YoY [26] - Free Cash Flow: Remained negative at Rmb1.23 billion [26] - Net Gearing: Increased to 19% in 1H25 from 16% at the end of 2024 [27] Risks and Challenges - Key Risks: 1. Higher lithium product prices 2. Project execution risk 3. Raw material purchase risk 4. Uncertainty in government policy affecting EV adoption 5. Currency and country risks related to overseas assets 6. Slower growth in EV battery recycling 7. Positive outcomes from SQM Atacama renewal [29][36] Conclusion - Rating: Maintain Sell rating for Tianqi Lithium with revised 12-month target prices at HK$21.5/Rmb23.0 [2][35]