Once, because there was a mine at home, Tianqi Lithium was simply lying down to make money. In 2022, the company's net profit increased by more than 10 times year-on-year to 24.1 billion yuan. According to the calculation of 248 working days a year, Tianqi Lithium earns nearly 100 million yuan per day. Now, because the price of lithium carbonate has fallen off a cliff, Tianqi Lithium, which has a mine at home, has also "lived in Bengbu".
A few days ago, Tianqi Lithium released a performance forecast, saying that it is expected to lose 3.6 billion yuan to 4.3 billion yuan in the first quarter, and make a profit of 4.875 billion yuan in the same period last year. For the performance thunder, investors voted with their feet, the stock price suffered a one-word drop limit, and the Shenzhen Stock Exchange quickly issued a letter of concern. From huge profits to huge losses, what happened to Tianqi Lithium, which has a mine at home?
The "Lithium King" exploded
After experiencing the scenery of 2022, Tianqi Lithium's net profit has been on a roller coaster. In 2022, the company achieved a net profit of 24.125 billion yuan, a year-on-year increase of more than 10 times. In 2023, the situation will take a sharp turn for the worse, and Tianqi Lithium's net profit will decrease by 69.75% year-on-year, leaving only 7.297 billion yuan.
Matching the decline in performance is the company's share price. In July 2022, Tianqi Lithium's share price hit a record high, reaching 145.57 yuan per share. As of April 25, Tianqi Lithium's share price closed at 39.19 yuan per share, down 73.08% from its peak.
The fluctuation of the stock price not only caused investors to lose a lot, but also caused the company's founder Jiang Weiping's net worth to shrink sharply. In 2022, he will rank 73rd in the country with a net worth of 58 billion yuan. On the list of the world's richest people in 2024, Jiang Weiping's net worth is 32.5 billion yuan, and his wealth has evaporated 25.5 billion yuan in two years.
That's the power of the cycle, but it's not over for Tianqi Lithium and its investors. On April 23, the company released a performance forecast, saying that in the first quarter, it is expected to have a net profit loss of 3.6 billion to 4.3 billion yuan, a year-on-year change from profit to loss. In the first quarter of 2023, the company achieved a net profit of 4.875 billion yuan.
In the face of such a thunderous performance, investors voted with their feet, and on April 24, the company's stock price went straight to the fall limit. The performance of big profits and big losses has attracted the attention of the Shenzhen Stock Exchange. The agency issued a letter of concern overnight, asking for explanations on the reasons for the large losses and whether there is a risk of continuous losses.
The decline in performance is not a difficulty for Tianqi Lithium alone. Ganfeng Lithium, which is also known as the "lithium battery double", will achieve a net profit of 4.947 billion yuan in 2023, a year-on-year decrease of 75.87%, Shengxin Lithium Energy will achieve a net profit of 702 million yuan in 2023, a year-on-year decrease of 87.35%, and Salt Lake will achieve a net profit of 7.914 billion yuan, a year-on-year decrease of 49.17%.
In the face of the industry cycle, no one has a hard time.
Blame the industry cycle?
For the huge loss in the first quarter, Tianqi Lithium explained that due to the fluctuation of the lithium product market, the company's lithium product sales price fell sharply compared with the same period last year, and the gross profit of lithium products fell sharply.
In the past few years, standing on the tuyere of new energy, the price of lithium carbonate has risen all the way, causing Tianqi Lithium, which has a mine at home, to lie down and make money. Insufficient supply and rising prices have attracted many companies into the industry. Demand-side growth cannot catch up with supply-side growth, and overcapacity has become an Achilles heel that all parties involved must face.
This can be seen clearly from the price trend of lithium carbonate. In 2022, the price of battery-grade lithium carbonate once hit 630,000 yuan/ton. With the increase in demand, at the beginning of this year, the price of lithium carbonate fell below 100,000 yuan/ton. During the period, it fell by more than 80%. There are no eggs under the nest.
As an enterprise mainly engaged in the development of lithium ore resources, the processing and sales of lithium concentrate and the production and sales of lithium products, the plummeting price of lithium carbonate will naturally affect the net profit of Tianqi Lithium. In the face of the downward cycle of the industry, the brilliance is destined to be unsustainable.
In the era of overcapacity, the lithium battery industry has also ushered in a brutal knockout. According to reports, up to now, nearly 20 listed companies have announced their failure to enter lithium batteries, either admitting losses and continuing to focus on their main business, or directly declaring bankruptcy.
In addition to facing the problem of clearing the industry, Tianqi Lithium has a little more trouble. In the first quarterly performance forecast, Tianqi Lithium mentioned an associated company, SQM. According to it, SQM's first-quarter performance is expected to decline sharply year-on-year, and the company's investment income on the associated company recognized in the reporting period decreased significantly compared with the same period last year.
While producing nearly 20% of the world's lithium, Tianqi Lithium's investment in SQM is facing more uncertainty. It is reported that SQM is going through a lawsuit, which may involve a $1.1 billion lawsuit, which will undoubtedly have a significant impact on Tianqi Lithium's profits and share price.
These issues are also highlighted in the Shenzhen Stock Exchange's concern letter. At present, Tianqi Lithium has not responded to this letter of concern. In any case, Tianqi Lithium's large performance in the first quarter may mean that the competition in the lithium battery industry will be more intense.