Good News & Bad News, page-45635

I don't understand all the talk over the last few days on PLS debt or earnings position as the reason that its expensive. I think we all know that PLS basically broke even over the last 6 months, the $30-40m they made after tax is just the interest on the cash pile.

So based on PE or other financial metrics you wouldn't buy it, the reason PLS has a premium valuation compared to other Li companies is that it has much bigger torque to the Li price than others. With 800k of spod moving to 1000k in the next year, with each increase of $100 USD on the Li price PLS makes $80-100m USD of before tax profit. That is significantly more than other Li companies where their production is lower.

Now if the Li price keeps going down then even PLS might have consider cutting production, but for the moment everyone is focused on the longer term and believe the Li price is considerable higher in the coming years. Under this scenario then PLS with P1000 will again print money.