...lithium hodlers need to be fully aware that it is the SC (Spod) price that matters, not how great the plant is, nor how great its management or if it is about to produce.
...based on Bell Potter's model, if I changed their $1200/MT SC6 price assumption for 2025 to $800/MT, LTR could be in for a -$245mil loss ! At $1200/MT, Bell Potter reckons they would be operating at -$58mil loss.
...And that's not great for a stock with a valuation of $1.73B even after fallen to 71c! At even at $1500/MT Sc6 price, LTR could make just a maiden $85mil NPAT, which still yields a PE multiple of 20x, which is more commensurate with current valuation. Yet compared to US peers trading at single digit PE, LTR has ways to go on the downside.
...if Tianqi can't operate at a profit but a big loss, how do you reckon LTR stands a chance to run a profitable operation? Tianqi Lithium swings to a loss
Bloomberg
A major Chinese lithium producer has swung to its first half-year loss since 2020, hit by the battery material’s massive price slump.
Tianqi Lithium posted a net loss of 5.21 billion yuan ($1.08 billion) for the first six months, from a profit of 6.45 billion yuan a year earlier, according to a statement late Friday.
A glut of supply has overwhelmed slower-than-expected demand growth from electric-vehicle makers, driving spot carbonate and spodumene prices to three-year lows. The drawn-out slump has squeezed producers’ margins, forcing some to rethink expansion plans, reduce spending, or shutter facilities to weather the downturn.
Tianqi said it has changed to a monthly pricing formula from quarterly for spodumene concentrate from its Talison project in Australia. The adjustment, introduced in January, was aimed at reducing “the adverse impact” from the discrepancy between the pricing cycle and the market spot price.
The company, which has a footprint spanning China, Australia and Chile, said it sees market fundamentals improving within the next few years. It will continue to work with top miners to explore new resource opportunities, while speeding up development of domestic resources, it added.
