Tianqi Lithium (09696.HK) (002466.SZ), a leading lithium mining company, exploded in the first quarter, which directly led to the collapse of the stock price of lithium mining stocks.
At the close of trading at noon on April 24, Tianqi Lithium's H-shares plummeted 18.01%, sharply refreshing a record low, and A-shares opened with a one-word drop limit, sealing more than 26 million shares.
Affected by the change in the performance of Tianqi Lithium, lithium mining stocks collectively turned downward on April 24. As of noon close, Ganfeng Lithium (01772.HK) (002460.SZ) H shares fell nearly 5%, A shares fell more than 6%, Shengxin Lithium Energy (002240.SZ), EVE Lithium Energy (300014.SZ) and other stocks fell.
Tianqi Lithium suffered a loss of more than 3.6 billion yuan in the first quarter and was questioned by the Shenzhen Stock Exchange
I never expected that Tianqi Lithium's performance would explode in the first quarter of this year.
On the evening of April 23, Tianqi Lithium disclosed its performance forecast for the first quarter of 2024, which is expected to have a net loss of between 3.6 billion yuan and 4.3 billion yuan for the company's shareholders in the first quarter, compared with a net profit of 4.875 billion yuan in the same period last year, and a net profit of 3.6 billion yuan to 4.4 billion yuan after deducting non-recurring gains and losses.
As for the reasons for the huge losses in the first quarter, Tianqi Lithium is rooted in two main reasons:
1) Affected by the fluctuation of the lithium product market, the sales price of the company's lithium products decreased significantly compared with the same period last year, and the gross profit of lithium products decreased significantly;
2) For SQM, the Company's significant associate, SQM has reviewed the accounting treatment of all tax dispute amounts based on the latest ruling and expects to potentially reduce its net profit for the first quarter of 2024 by approximately US$1.1 billion. The Company believes that this matter is expected to reduce the Company's net profit attributable to the parent company.
However, after the first quarterly report was announced, Tianqi Lithium soon received an inquiry letter from the Shenzhen Stock Exchange, which expressed concern about the reasons for Tianqi Lithium's losses. The Shenzhen Stock Exchange has put forward specific inquiry requirements for Tianqi Lithium, including requiring the company to quantitatively analyze the reasons for the increase in losses based on multiple factors such as its main business, product production and sales, and price, and explain whether there is a risk of sustained losses.
At the same time, the Shenzhen Stock Exchange required Tianqi Lithium to explain the specific situation and subsequent progress of the SQM tax dispute ruling, the amount of impact on Tianqi Lithium's net profit in the first quarter and the basis for calculation, and Tianqi Lithium confirmed whether the impact of the relevant tax dispute ruling complied with the relevant provisions of the Accounting Standards for Business Enterprises in the first quarter.
The Shenzhen Stock Exchange requires Tianqi Lithium to submit the relevant explanatory materials to the Shenzhen Stock Exchange and disclose them to the public before April 26, 2024.
Ganfeng Lithium, another company in the "lithium mine duo", will disclose its first-quarter results on April 30, affected by many negative factors in the industry, the market is worried that Ganfeng Lithium may face the same performance decline and even loss as Tianqi Lithium.
Lithium prices continued to decline, and the valuation of lithium mining stocks fell to the bottom
Against the backdrop of weaker-than-expected demand and a growing inventory backlog, the much-talked-about "white oil" lithium carbonate price has been falling since December 2022.
Wind data shows that although lithium carbonate prices have shown signs of stabilizing since the beginning of this year, the market still lacks momentum to push lithium carbonate prices up significantly. On April 23, the average price of lithium carbonate (99.5% battery grade/domestic) fell to 120,000 yuan/ton, a cut of more than 60% from the stage high in late June last year.
Affected by the oversupply of the industry and the bottom of lithium prices, the lithium battery industry continues to adjust this year.
Wind data statistics, as of April 24, the Wind lithium battery index has fallen by more than 17% this year, and the Shanghai Composite Index has risen by about 1.9% in the same period, significantly underperforming the Shanghai Composite Index.
In terms of valuation, after nearly two years of adjustment, the current valuation of lithium stocks has fallen to a low level.
Wind data shows that the current valuation of the lithium battery index price-to-earnings ratio TTM is 19.78 times, which is basically near the historical low, which is significantly lower than the median of 67.28 times and also lower than the opportunity value of 38.90 times.
For the supply and demand of the lithium mining industry and the performance of lithium prices in 2024, many people in the industry are pessimistic.
According to industry insiders, the lithium market is expected to show an oversupply situation in 2024 after experiencing large price fluctuations in 2023, and the annual surplus is expected to exceed 200,000 tons based on the price of lithium carbonate of 100,000 yuan per ton.
Lyon previously said it had lowered Ganfeng Lithium's earnings forecast by 66% and 69% this year and next due to a weaker outlook for lithium prices.
HSBC recently released a research report pointing out that unless lithium production is further reduced or downstream replenishment demand is more positive, lithium prices will remain at the current level in the first half of this year under the premise of the current oversupply of relevant raw materials. The bank lowered its price target for Tianqi Lithium.
Author: Far away