A Huge Loss Of 1.8 Billion, But The Impact Of Stock Price, Operation And Financial "Turning Point" Gradually Verified That Tianqi Lithium'S Financial Expenses Decreased By 700 Million Year On Year

The market value of Jiangxi copper and Tianqi lithium is similar. The first quarter profit of the former increased by 436%, while the latter continued to be in a loss state.

However, on April 28, Jiangxi Copper fell more than 5% in the intraday period, while Tianqi lithium industry touched the limit. Why did this "Deviation" trend occur?

The key lies in the market expectation. The past operating performance has become a fact. The capital market should pay more attention to the elasticity and certainty of future performance growth of listed companies. Tianqi lithium, which is still in a loss state, is undoubtedly more in line with the "aesthetic" of the secondary market because of its low profit base.

According to the regular report released on the evening of 27, the two major problems troubling Tianqi lithium industry showed signs of improvement.

First of all, the financial expenses that have been swallowing the company's profits in the past two years. In 2020, due to the use of the funds raised from the allotment of shares in December 2019 to repay part of the loan principal of the syndicate, and the interest cost decreased due to the reduction of LIBOR interest rate, the year-on-year decrease of RMB 700 million to RMB 1.33 billion.

Secondly, although the prices of lithium carbonate and other products began to rebound in the second half of 2020, the average sales price and sales volume of Tianqi lithium industry in the current period decreased compared with that in 2019 due to the low price in most of the time. However, the product price increase in the second half of 2020 will delay the release of the company's profitability, such as in the first quarter of this year. At the same time, considering the low base of net profit loss of 1.8 billion yuan in 2020, the company's performance flexibility will be stronger in 2021 and beyond.

In addition, the company's stock price dropped from 70 yuan to 33 yuan in the early stage. After the annual report and the first quarter business data were finalized, Tianqi lithium showed a rise and stop.

On April 29, after the big rise of the previous day, the stock price of Tianqi lithium continued to rise. As of the press release, the share price of Tianqi lithium rose 1.61% to 44.30 yuan.

Main business "turning point" tamped

Although the prosperity of lithium industry will decline rapidly in 2019 and 2020, Tianqi lithium industry, with its own cost advantage, does not have too many problems in its main business.

The more obvious impact is that the company's revenue scale and profit margin are affected by the decline of product price, but the main business is still in a profitable State.

According to the annual report, the revenue of Tianqi lithium industry will be 3.24 billion yuan in 2020, a year-on-year decrease of 33.08%.

In this regard, the company attributed it to "the expansion of the new crown pneumonia epidemic causes the export share to decrease. Although the lithium chemical product market rebounded in the fourth quarter of 2020, the average sales price and sales volume of the company's products in this year are lower than those in 2019. "

As for the main products, the sales volume of "lithium mining, dressing and smelting industry" representing lithium concentrate was 353000 tons, which was 346000 tons in the same period of last year. The sales volume of "chemical raw materials and chemical products manufacturing industry" representing lithium carbonate and other products was 35700 tons, and 40800 tons in the same period of last year.

The overall sales volume of products decreased slightly, combined with the decline of product price, and the income scale of the two main businesses of the above companies decreased.

Another effect of the decline in product prices is that the company's profit margin will decline accordingly. By product, the gross profit rate of lithium compounds and derivatives of the company in 2020 was 23.71%, with a year-on-year decrease of 24.83%. Although the gross profit rate of lithium ore decreased synchronously, it was still as high as 62.53%.

The reason lies in the company's leading cost advantage in the industry.

According to roskil statistics, the cost of lithium carbonate extraction in Tianqi lithium industry is only higher than that of American Yabao and Chile sqm companies, and is basically equivalent to that of Chinese brine lithium extraction enterprises and Yabao China companies, and is significantly lower than that of Ganfeng lithium industry and other domestic companies in the same industry.

The advantage of low cost is that when the product price falls, the enterprise's price tolerance is stronger and the cost "safety cushion" is thicker. When the product price rises, its profit margin is higher than that of its peers, and its performance elasticity is stronger.

Therefore, when the price of lithium carbonate and other products rose sharply in the first quarter of this year, the problem that led to the decline of revenue and profit margin of Tianqi lithium industry was solved.

The first quarter report data showed that the current loss of Tianqi lithium industry decreased to 250 million yuan, compared with 500 million yuan in the same period of last year.

In the first quarter of this year, Tianqi lithium also included 400 million yuan of financial expenses. If this part of expenditure is excluded, the company has entered the first quarter of this year "flat", a slightly surplus profit state.

It should be pointed out that the rise of lithium carbonate was mainly started in the first quarter. During this period, with the continuous increase of average sales price, the Growth Logic of peer companies including Tianqi lithium was confirmed immediately.

Ganfeng lithium, another domestic lithium giant, is expected to achieve a net profit of 450 million yuan to 510 million yuan, compared with 7.7461 million yuan in the same period in 2020.

After entering the second quarter, although the price growth of lithium carbonate and other products slowed down, it is still at the high level since the rebound in the first quarter, which will further increase the average sales price of "two giants of lithium industry".

In theory, the profitability of the main business of the two companies in the second quarter will be further improved.

The conversion of financial expenses into net profit is yet to be realized by Igo financing

Different from Ganfeng lithium, we should pay more attention to the company's debt when studying and judging the profit trend of Tianqi lithium, which is the key to determine whether the company's financial report profit can be turned into positive.

In 2018, the company had a huge debt due to the acquisition of 23.77% equity of sqm company. Therefore, the financial expenses of Tianqi lithium industry increased to 2.028 billion yuan in 2019, and the financial expenses were always lower than 100 million yuan before 2017.

This financial expense greatly swallowed up the operating profit generated by the company's main business, superimposed the impairment impact on sqm equity in 2019, and finally caused a huge loss of the company in that year.

And in 2020, Tianqi lithium industry financial side began to appear some positive signals.

Data shows that the company's financial expenses in the current period totaled 1.33 billion yuan, a decrease of 34.45% compared with the same period in 2019“ It is mainly due to the increase of exchange gains and losses caused by the exchange rate changes in 2020, and the decrease of interest expenses due to the repayment of some syndicated loan principal by allotment of shares in December 2019, and the decrease of interest expenses due to the reduction of LIBOR interest rate Tianqi lithium industry annual report pointed out.

After repaying the loan, the company's overall debt scale and financial expense expenditure pressure can be reduced. However, only from the annual report data, at this stage, we can only establish the financial inflection point on Tianqi lithium's "account".

More importantly, it needs to be determined according to the current financing situation of the company. In December last year, Tianqi lithium announced that the company's wholly-owned subsidiary, tlea, intends to introduce strategic investor Igo, an Australian listed company, by means of capital increase and share expansion.

Specifically, Igo lithium holdings Pty Ltd, a wholly-owned subsidiary of Igo, will contribute US $1.4 billion (about RMB 9.138 billion) and pay a new registered capital of US $304 million.

The above funds will be mainly used to repay the principal and interest of the syndicated M & a loan of US $1.2 billion, and the remaining funds will be reserved in tlea as supplementary funds for the operation and commissioning of the quina lithium hydroxide plant affiliated to its subsidiary Tlk.

According to Tianqi lithium's annual report, except for the examination and approval of FIRB (Australian Foreign Investment Review Board) and the tax authorities of the United Kingdom and Australia on the internal restructuring of the transaction, the other delivery conditions have been completed. In the normal progress of relevant external examination and approval work, so far there are no substantive obstacles such as veto or prohibition.

In addition, according to the relevant announcement information of the investor Igo, the fund raised by equity financing and selling some non core assets can cover the consideration of this transaction; Among them, equity financing has been completed and the asset sale agreement has been signed.

In the future, assuming that the financing is successfully implemented, the huge debt pressure of Tianqi lithium industry will undoubtedly be lightened and the financial expenses will be reduced accordingly.

At that time, the listed companies' annual financial expenses of more than 1 billion yuan will also be converted into the profits of listed companies. Of course, the financing from Igo is still uncertain.

Behind 53% "super retreat": players changed

Compared with Ganfeng lithium, which is also a giant in the industry, the seller's attention of Tianqi lithium is obviously lower, which can be seen from the number of research reports issued.

However, under the seemingly calm water surface, it is a different scene. In December 2020, in the stage of Igo financing news and the systematic rise of the whole new energy sector, Tianqi lithium rose from less than 28 yuan to 70.13 yuan, and then started a wave of "super retreat" of nearly 53%, and the stock price dropped to around 33 yuan.

By comparing the annual report and the first quarter report, we can see that institutional investors have completed the "shift change".

First of all, at the end of the third quarter of 2020, the number of shares held by fund institutions in Tianqi lithium industry was 45.5241 million shares. During the period of the fourth quarter's surge, the fund increased its position to 135.33 million shares, and by the end of the first quarter of this year, it reduced its position again to 60.58 million shares.

In terms of the list of the top ten tradable shares, the change of fund institutional shareholding is also more obvious.

Excluding the securities and Huijin companies with stable shareholding, in the fourth quarter of 2020, the two funds of HSBC Jinxin low carbon pioneer and intelligent manufacturing pioneer, as well as the investment promotion industry selected stock fund and the client funds of annade partners Co., Ltd. were added to the list of top 10 circulating stocks.

In the first quarter of 2021, the low-carbon vanguard of HSBC Jinxin reduced its position, and the other ten shareholders of tradable shares were replaced by Dongfang new energy vehicle theme fund, ICBC UBS new energy vehicle theme fund and e fund innovation closed operation hybrid fund in the next 18 months.

In addition, two natural person investors stand together and Wang Jizhong is listed in the list of top ten circulating shareholders.

It should be pointed out that although there are IPO Financing and the company's subsequent further financing expectations, as long as the financing matters are not implemented, Tianqi lithium industry will face certain uncertainty risks.

On the institutional level, due to internal investment decision-making and other factors, participation in "problem companies" such as Tianqi lithium may also face many restrictions.

In addition, combined with the number of fund holdings at the end of the first quarter, it is obvious that institutional investors have not yet entered the stage of large-scale participation.

As one of the world's lithium giants, Tianqi lithium industry is an important target for investors, including institutions, in terms of industry status, resource endowment, cost advantage and performance flexibility.

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