Tianqi Lithium (002466) first quarterly report comments: 2019Q1 gross profit margin increased month-on-month, focus on subsequent financing and debt reduction progress

Tianqi Lithium (002466) first quarterly report comments: 2019Q1 gross profit margin increased month-on-month, focus on subsequent financing and debt reduction progress

The company’s performance in the first quarter of 2019 was in line with expectations, and the net profit attributable to the parent was 1.

110,000 yuan (YOY-83.

14%) The company released the 2019 first quarter report: the first quarter of 2019 achieved operating income13.

37 billion yuan (YOY-19.

89%), net profit attributable to mother 1.

110,000 yuan (YOY-83.

14%), net profit after deduction is 0.

8.2 billion (YOY-88.

14%), net cash flow from operating activities4.

5.5 billion (YOY-52.

96%).

The company expects that the net profit attributable to its mother for the first six months of 2019 will be 1.

5-2.

2.5 billion, a year-on-year decline of 82.

82% -88.

54%, the first is the increase in M & A loans, leading to increased spending and decline in lithium chemicals.

We believe that the company has the world’s highest quality brine and spodumene resources among lithium compound producers. The industry has a bright future in the track and has firm confidence in the company’s long-term development.

We estimate the company’s net profit attributable to its parent to be 14 in 2019-2021.

86/24.

24/33.

5.4 billion, corresponding to an EPS of 1.

30/2.

12/2.

94 yuan, maintain “highly recommended” level.

Gross profit margin increased by 1.

56 points, the financial performance of the first 苏州桑拿 quarter of 2019, we believe that there are five core points to pay attention to: 1. The company’s comprehensive gross margin in the first quarter of 2019 was 61.

07%, a month-on-month increase of 1.

56 points, reflecting the company’s product competitiveness.

2. Sales of lithium compounds increased by 27 compared with 2018.

85%, in the case that the company’s Suining project and the Australian project have not yet reached full production, it shows that the company’s products are selling well and remain basically full.

3. According to the company’s debt acquisition and acquisition of SQM, the financial cost for 2019Q1 is 5.

1 ppm, after adding back the financial fee and taking into account the income tax rate factor, the net profit in 2019Q1 is 4.

8.7 billion.

4. The investment income of the company in Q1 2019 is 1.

4 ppm, which is calculated by SQM according to the weight law.

According to the 44th shareholders’ meeting of SQM, SQM will distribute 100% of its annual net profit in 2018, which will effectively protect the company’s dividend rights and increase cash inflows from investment activities.

5. In Q1 2019, the company’s operating income / sale of goods and labor cash ratio reached 116%, and the company’s cash recovery was good.

Therefore, the company’s product competitiveness, gross profit margin, production and operation conditions and profit quality remain good. The company plans to raise US $ 7 billion in rights issue and repay the SQM M & A loan. On April 11, 2019, the company’s board of directors approved the “Alternative Issues Concerning the Company’s Rights Issue” and the corresponding securities issuance plan.

SQM23.
The amount of funds raised from the rights issue will not exceed RMB 70 million, and the net amount after deducting the issuance costs is intended to be fully repaid.

77% stake in M & A loans.

We believe that progress in the company’s subsequent financing and cost reduction efforts will greatly enhance the company’s profitability.

Risk warning: debt repayment risk; production capacity advances less than expected.