Today, let’s talk about the global lithium mining giant – $Chile Mining Chemical (SQM.US) $ . Against the backdrop of a gradual shift from inflation worries to recession fears and a sell-off frenzy in U.S. stocks, the company has quietly hit new highs, up nearly 90% this year.

The focus of this article:

1. What kind of company is SQM?

2. How is the company’s performance?

3. What is the current status of the industry?

4. What does the organization think?

What kind of company is SQM?

SQM is the world’s largest producer of iodine and a leading supplier of lithium products. Its business scope mainly involves special plant fertilizers, iodine, lithium, potassium and industrial chemicals.

SQM has been producing lithium carbonate since 1997 and lithium hydroxide since 2005. It has rich experience and production technology in lithium extraction from salt lake brine. Its main business involves five sectors, including specialty plant fertilizers, iodine and its derivatives, lithium and its derivatives, industrial chemicals, potassium and its derivatives, etc.

According to the research of China National Financial Securities, the most important development node of SQM is to reach an agreement with Corfo in 1993 to obtain the mining rights of the Atacama Salt Lake. The high-quality lithium resources not only bring rich returns, but also establish the company’s leading position in the lithium industry. status.

Q1 performance exceeded market expectations, and Q2 prices are expected to continue to rise

According to Northeast Securities, SQM’s performance in the first quarter of 2022 showed a milestone growth, achieving revenue of US$2.02 billion, a year-on-year increase of 282%; net profit reached US$796 million after paying US$800 million in Corfo fees and taxes, a year-on- year increase . Tenfold increase. Prices rose across all business lines, with lithium prices rising significantly.

Among them, the lithium business achieved revenue of US$1.45 billion in the first quarter, a year-on-year increase of 970%; sales volume was 38,100 tons, a year-on-year increase of 59%; the average selling price was US$38,000/ton, a year-on-year increase of 571%. 60% of operating profit is used for Corfo fees and taxes. It is the only business that proportionally contributes resources to Chilean copper mines, reflecting a successful public-private partnership. In the future, we will continue to analyze and research new projects. Investment plans will be reviewed in the coming months and forecasts will be updated, likely to increase resources for business development in Chile and abroad.

Since 2021, the price of international fertilizers has been rising. After the outbreak of the Russian-Ukrainian conflict, the supply has been further tightened. The increase in international fertilizer prices has directly led to a substantial increase in the revenue and net profit of fertilizer manufacturers. SQM is also one of the beneficiaries.

In addition, the company said that 20% of the company’s lithium business sales are fixed at a fixed price, 50% of the sales are priced at an index-linked variable price (usually with a lag of about 3 months from the spot price), and the remaining 30% have not been locked. As the price of the 50% variable pricing part moves closer to the spot price, the company expects the Q2 selling price to be higher than the Q1 ($38,000/t).

The lithium ore market is booming! Institution: optimistic about the high price of lithium and its sustainability

On Saturday, the bidding for 54% equity of Snowway Mining, which lasted for nearly five days and five nights, finally came to an end. The transaction price was 2 billion yuan, 597 times the starting price of 3.35 million yuan, which once again showed the hot market of lithium resources.

Li Shuaihua, an analyst at Pacific Securities, commented on the latest research report that the auction price far exceeded market expectations, indicating that the competition for lithium resources has intensified.

Industry insiders said that lithium ore has become a rare resource at present, and obtaining stable lithium resources is of great benefit for enterprises to stabilize supply, reduce costs and enhance market competitiveness.

The Guojun Nonferrous Metals and New Materials team believes that benefiting from the explosion in demand for new energy vehicles and energy storage, the demand for the lithium industry is expected to maintain a compound growth rate of more than 30% in the future. In 2022, the contradiction between supply and demand in the lithium industry is still prominent, and the gap between supply and demand lies in the resource side where the expansion rate is slower. We are optimistic about the high price of lithium and its sustainability.

CITIC Securities stated that the high premium transaction of Snowway Mining’s equity auction highlights the current high prosperity of the lithium industry and the fierce competition for lithium resources. Lithium ore has become the core link restricting the growth of lithium supply. The continuous rise in ore prices has formed support for lithium prices, and lithium prices are expected to stop falling and rebound in the middle of the year.

Since SQM released its “exploded” quarterly report, major Wall Street banks have raised their target prices. The current average target price is $100.33, which still has a potential upside of 5% from the current stock price.

This article is reprinted from: https://news.futunn.com/post/15779987?src=3&report_type=market&report_id=206402&futusource=news_headline_list
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