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Tianqi Lithium (002466) Quarterly Report Review: Financial Costs Devour Performance Leading to Q3 Transformation

Tianqi Lithium (002466) Quarterly Report Review: Financial Costs Devour Performance Leading to Q3 Transformation

Core point of view: three quarterly reports: net profit attributable to mothers in the first three quarters1.

The 390,000 yuan company released the third quarter report of 2019, and the first three quarters achieved revenue of 37.

9.7 billion yuan, a decrease of 20.

21%; net profit attributable to mother 1.

39 trillion, down 91.

74%; EPS is 0.

12 yuan / share, the same reduction of 91.

9%.

The company expects to gradually return its net profit to 0 in 2019.

8-1.

2 trillion, the same minus 94.

6% -96.

4%.

Financial expenses increased without decline, performance expanded quarter by quarter and Q3 corrected the company’s Q1-Q3 revenues to be 13 respectively.

37, 12.

53,12.

08,000 yuan, net profit attributable to the mother is 1.

11, 0.

82, -0.

The company’s performance decreased by USD 5.4 billion quarterly and Q3 decreased, mainly due to: 1) financial costs increased due to M & A debt brought by the acquisition of SQM equity (Q1-Q3 company’s financial costs were 5).

1, 5, 6.

4 ppm); 2) The price of lithium has fallen and the gross profit margin of the product has decreased (Q1-Q3 Baichuan Electric’s average carbon price was 7 respectively.

9, 7.

7,6.

70,000 yuan / ton, the company’s gross profit margin is 61%, 61%, 53%); 3) SQM performance conversion leads to return on investment income (Q1-Q3 investment income is 1 respectively.

39, 0.

94, 0.

7.7 billion).

At the end of the third quarter, the asset-liability ratio reached 75%, and it is expected to continue to decrease in the fourth quarter.

Active financing and stable operation can guarantee the repayment of principal and interest of the company. The company’s main task at present is to solve the problem of repayment of principal and interest of M & A loans. In addition to actively completing the rights issue, it will continue to seek other financing while ensuring the normal and stable operation of the existing business.

According to three quarterly reports, the company’s Quinana Phase 2.

4 Potassium hydroxide project is expected to enter continuous production and capacity climbing before the end of the project; the second phase of the expansion of Thaleson has been commissioned and operation has been fully started.

In addition, the company has temporary agreements with LG and Northvolt respectively, and has locked 21% -25% of the capacity of lithium quina hydroxide.

The company can guarantee the repayment of principal and interest of M & A loans through various financing methods and stable cash flow provided by existing businesses.

The profit forecast and investment proposal do not consider financing such as rights issue. It is expected that the company’s EPS for 2019-2021 will be 0.

10, 0.

53,1.

09 yuan / share; comparable company Ganfeng Lithium’s EV / EBITDA in 2019 is 21.87x, we think that giving the company 22x EV / EBITDA in 2019 is reasonable, and the corresponding company’s reasonable value is 27.

7 yuan 深圳桑拿网 / share, considering the company’s leading parts and components and the future growth of the company and the industry, maintain a “buy” rating.

Risk Warning: Low-expected financing progress such as rights issue; low-expected progress of new projects.