Banter and general comments, page-13804

Macquarie has just initiated research on CXO with an Outperform and have a 12-month target of $1.80. They are basing their valuation using a 7 x EV/Ebitda multiple, with a 2024FYE for EBITDA of ~$600 Million. Note Macquarie calculate EBITDA both on their lithium price forecasts, and current spot prices. There is significant upside if prices stay higher for longer.



Lithium companies have traditionally traded at >10 x Ev/Ebitda multiples but are trading at much lower valuations because of the perception that lithium prices will decline in the future. View the below video for background on EV/Ebitda valuations for Lithium companies.

(943) Q & A w/ Rodney Hooper: Q2 Lithium Earnings & July Equity Scoreboards - YouTube

At the beginning of the year, Macquarie was using a 12 x EV/Ebitda for the valuation of PLS but have decreased it gradually to a current multiple of 8 x EV/Ebitda. Share prices have not been able to keep up with the increased Ebitda's so they have had to continually dial back their multiples.

An analogy to this could be the markets view of the iron majors which trade at 5 x Ev/Ebitda multiples.

As Howard Klien states, the market is viewing the lithium miners more as a bulk commodity miner, rather than a specialist industrial mineral supplier. As the lithium market grows and expands and there are more suppliers in the market, the Ev/Ebitda multiples may well continue to trend downwards to match those of bulk commodity suppliers like the iron majors.