Hi Folks
Up before sunrise , again.
A continuation on my thoughts in the previous post about my curiosity of the PLS SP against it's peers.
I like to draw logical conclusions to show the detachment from realty.
* 2022/23 income $AUD 4,100m SP 4.80
* 2023/24 likely income $AUD 1,250m ( 69% reduction of income) Current SP 3.80 (21% reduction in SP)
* 2024/25 If we see a another 69% reduction in income being $AUD 390 then the future SP should reduce 21% to 3.00
Hmmm 2022/23 income $AUD 4,100 SP 4.80 , 2024/25 income $AUD 390 SP 3.00. something doesn't make sense.
Using this logic if we stop selling any product at all, there would be a huge reduction in royalty costs and production costs, and the SP should be about 2.00.
Of course there is not going to be another 69% reduction in income for the 2024/25 FY, but it does show the irrational behaviour of the current SP in the face of a reduction of income.
The Lith price drop will slow and eventually turn upwards. Yes, but when?
I could have produced those charts for ALB, SQM , Tianqi and Ganfeng 6 months ago showing the tanking SP. And many would have said that the market will have to turn soon. It got worse.
6 months further on and each of those companies SP is still between 15-20% lower than the falling 40WMA. So a large gain in SP is required just to cut into that falling 40WMA. That's not going to turn it around, just catch up with it.
Obviously the market, in pricing these companies doesn't believe that the turn in Lith prices is on the horizon, yet.
When tulips went from 1 Guilder to 60 Guilders in the boom I wonder how many people went bargain hunting and buying tulips at 10 guilders, because the market had to turn back up soon.
Maybe a poor example, however I could have used Wall street shares in the 1930's Poseidon shares in 1969, 1987 boom/crash , Dotcom shares in 2000 or even GFC shares in 2008. All bubbles that eventually corrected and I think we have seen a bubble in Lith shares.
If you doubt the Lith bubble story then take a look at the 4 companies Peeks to current SP.
* ALB 323 to 132
* SQM 115 to 49
* Ganfeng (1772.hk) 123 to 23
* Tianqi (002466.sz) 148 to 47
I'll trust a price turn when it reveals itself in the SP of those 4 companies and also when it shows up in the PLS quarterly reports for $US shipped Spod.
Just my thoughts , DYOR.
cheers Lies
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