Macquarie lowered Tianqi Lithium's (09696) net profit forecast for the 2024 and 2025 fiscal years by 99% and 70%, respectively.
The Zhitong Finance App learned that Macquarie released a research report stating that the “outperforming the market” rating from Tianqi Lithium (09696) lowered the net profit forecast for the 2024 and 2025 fiscal year by 99% and 70%, respectively. It is mainly based on factors such as falling profits of Australian mining company IGO Limited, one-time tax cancellation in the first quarter of this year, and hypothetical decline in lithium prices. Taking into account the above factors, the target price was reduced from HK$48.5 to HK$41.1.
According to the report, the company recorded significant losses in the first quarter of fiscal year 2024, mainly due to a one-time tax write-off by its subsidiary Chilean Chemical and Mining Company (SQM), and the pressure on the company's profit margins due to high-priced spodumene inventories. The bank expects that as Tianqi Lithium changes spodumene procurement to monthly pricing, the impact of the company's high-priced inventory will subside in the second half of this year. The bank said that the growth in demand for lithium from Australian lithium exploration company Essential Metals Limited has remained very strong so far this year. Strong demand for lithium also continues to drive down lithium inventories. The bank anticipates that lithium prices will risk upward in the future due to potentially strong downstream demand.