While Citi has reduced its FY 2022 earnings estimate to reflect...

While Citi has reduced its FY 2022 earnings estimate to reflect the company’s recent update, it has given its FY 2023 and FY 2024 estimates a major boost to reflect higher spodumene price assumptions.

"We update our model for the JunQ result and Citi’s higher spodumene deck. JunQ nos were pre-released –see: Cash flows in JunQ. Capex for expansion gets front-end loaded — with new info definitive cash costs of US$462/t CIF ex royalties. FY23 guidance to come with the financial result in August. Key interest at the result will be on capital management; PLS ended JunQ with A$874.2m including letters of credit.

Our EBITDA reduces by 9% in FY22e to A$840m after updating for the result. However, EBITDA lifts materially in FY23e and FY24e given higher spodumene prices. NAV lifts ~16% to A$2.70/sh and our TP lifts 40cps toA$3.60/sh. We stay Buy rated here with expectations of +15% FCF in FY23e."