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After Tianqi Lithium (002466) disclosed the announcement of a pre-loss of 4.3 billion yuan to 3.6 billion yuan in the first quarter on the evening of April 23, the Shenzhen Stock Exchange issued a letter of concern overnight, requiring the company to quantitatively analyze the aggravation of performance losses, and explain the impact of the company's associate company SQM (Chilean Chemical Mining Company) on the company's net profit and the calculation basis. Under the influence of the news of performance pre-loss, the company's stock price fell to the limit on the 24th, and dragged the lithium battery sector down.
The Shenzhen Stock Exchange issued a letter of concern overnight
On the evening of April 23, Tianqi Lithium released a performance forecast for the first quarter of 2024, with an expected loss of 4.3 billion yuan to 3.6 billion yuan, and a profit of 4.875 billion yuan in the same period last year.
Tianqi Lithium said that during the reporting period, affected by the fluctuation of the lithium product market, the sales price of the company's lithium products decreased sharply compared with the same period last year, and the gross profit of lithium products fell sharply.
On the other hand, SQM, the company's important associate, has not yet announced its first quarter 2024 results, and the company uses the information from Bloomberg's forecast to calculate the company's investment income on SQM for the same period. In addition, SQM issued a statement stating that the Court of Santiago, Chile, ruled in April this year on its tax proceedings for the 2017 and 2018 tax years, reversing the conclusion of the Tax and Customs Tribunal's decision on the case on November 7, 2022. Based on the latest ruling, SQM expects to reduce its net profit for the first quarter of 2024 by approximately US$1.1 billion, which is expected to reduce the company's net profit attributable to the parent company. Combined with the impact of the above two factors, the Company expects the investment income of the associate to decline significantly compared to the same period last year.
The news of the pre-loss immediately aroused the attention of the regulator. On the evening of the same day, the Shenzhen Stock Exchange issued a letter of concern to Tianqi Lithium, requiring the company to combine the development of its main business, product production and sales, product prices, raw material purchase prices, costs, The specific changes in the impairment provision and other factors, quantitatively analyze the reasons for the significant increase in losses in the first quarter of 2024, and explain whether there is a risk of continuous losses, explain whether the changes in the company's operating conditions are in line with the trend of industry changes, explain the specific situation and subsequent progress of the SQM tax dispute ruling, the amount of impact on the company's net profit in the first quarter and the basis for calculation, and confirm whether the impact of the relevant tax dispute ruling in the first quarter is in line with the relevant provisions of the accounting standards for business enterprises.
$4 billion "to sea" Chile
According to the data, SQM is a global company based on Chilean companies, which is listed on several stock exchanges in Chile and the United States at the same time. The company operates the Atacama Project, the world's largest lithium salt lake, with a resource of approximately 10.8 million tonnes of lithium metal equivalent, ranking among the top in the world in terms of resources and grades.
In May 2018, Tianqi Lithium announced that the company planned to acquire SQM6255 6,600 Class A shares (accounting for 23.77% of its total share capital) with self-raised funds of US$4.066 billion. In December of the same year, Tianqi Lithium and Tianqi Chile, a wholly-owned subsidiary of Chile, completed the payment and transfer of the consideration for 23.77% of the equity interest in SQM. Together with the company's original 2.10% class B equity of SQM, Tianqi Lithium holds a total of 25.86% of the equity of SQM, becoming its second largest shareholder.
According to the 2023 financial report, as of the end of the reporting period, Tianqi Lithium Hong Kong held 0.26% of SQM, Tianqi Chile held 21.90% of SQM, Tianqi Lithium's net assets share of SQM calculated by shareholding ratio was 8.738 billion yuan, accounting for 16.96% of the company's net assets, and the investment income recognized in the current period was 2.931 billion yuan.
However, the reporter of "Public Securities Journal" checked the company's announcement and found that as a joint venture, Tianqi Lithium did not have enough say in the corporate governance and development of SQM, and there was no constraint and guarantee on the performance impact of SQM on Tianqi Lithium due to performance fluctuations.
According to the announcement previously disclosed by Tianqi Lithium, the company entered into and submitted an out-of-court agreement with the Chilean National Economic Prosecutor's Office (hereinafter referred to as "FNE") to take certain measures to rule out such potential impacts as determined by FNE, including Tianqi Lithium's commitment not to request and obtain commercially sensitive information related to SQM's lithium business, and to use its best efforts to ensure that SQM's directors nominated or elected by Tianqi Lithium do not disclose such information to them or third parties.
In addition, Tianqi Lithium said that since there was no performance commitment arrangement and compensation arrangement in this transaction, when the operating performance of the target company was less than expected, the counterparty of this transaction did not have corresponding compensation arrangements, and investors were reminded to pay attention to the relevant risks.
In fact, the financial risks associated with this overseas investment have also attracted the attention of regulators. In 2018, the Shenzhen Stock Exchange pointed out in an inquiry letter to Tianqi Lithium that according to the Report, it was unable to provide the financial statements and audit reports of the target company prepared in accordance with the company's applicable Chinese Accounting Standards for Business Enterprises because it was unable to conduct a comprehensive audit of the target company before the equity delivery. The Shenzhen Stock Exchange requires the company to explain whether it has violated the Administrative Measures for the Material Asset Restructuring of Listed Companies and other relevant regulations.
At that time, the auditor ShineWing stated in its reply that the financial reports and audit reports prepared by the audited International Financial Reporting Standards (IFRS) prepared by SQM and the differential assurance reports issued by the firm publicly disclosed in the capital markets in many places disclosed the financial information of the target company in relevant material aspects. However, ShineWing also made a special statement: "Since SQM has not implemented audit and other assurance procedures for the financial information of SQM, it does not issue audit and other assurance opinions on the above-mentioned financial information of the target company." ”
The lawyer said that the company was obliged to disclose information about the associates
On the 24th, under the influence of the negative news of the performance loss, the A-share share price of Tianqi Lithium opened with a falling limit and closed the falling limit throughout the day. Tianqi Lithium's H shares also fell 19.15% on the same day.
Dragged down by the negative news of Tianqi Lithium, the Wind lithium battery sector fell by 0.36% as a whole on the 24th, and more than forty percent of the stocks fell, with Baoli Xin, Desay Battery, Ganfeng Lithium, Rongbai Technology, Shengxin Lithium Energy, etc. falling by more than 5%.
On the 24th, Zhao Jingguo, a senior partner of Shanghai Xinben Law Firm, said in an interview with this reporter: "The associated enterprises of listed companies are not included in the scope of consolidated statements, and their relevant operations do not fall within the scope of information disclosure requirements. According to Article 22 of the Administrative Measures for Information Disclosure of Listed Companies, if there is a risk of a decline in the performance of the listed company's associates, resulting in significant losses or major losses on the listed company's securities and its derivatives, the listed company shall immediately disclose the causes, current status and possible impact of the event if the investors have not yet learned of it. ”
According to information on SQM's official website, SQM announced that it will hold an extraordinary general meeting of shareholders at 10:00 a.m. local time on April 24 to discuss and vote on the transaction envisaged in the memorandum of understanding signed by SQM and Codelco (Chilean National Copper Company).
On the 24th, the reporter called Tianqi Lithium on the impact of the cooperation between SQM and Codelco on the company's future performance, but the company's phone was busy.
Reporter Zhu Rong