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Today we're going to talk about this global lithium mining giant--$Chile Mining and Chemical Industry (SQM.US) $. Against the backdrop of a gradual shift from inflation concerns to recession fears and a sell-off in u.s. stocks, the company has quietly hit a new high, up nearly 90% this year.
The focus of this article is as follows:
What kind of company is SQM?
2. How is the company's performance?
3. What is the current situation of the industry?
4. What does the organization think?
What kind of company is SQM?
SQM is the world's largest iodine producer and a leading supplier of lithium products.Its business scope is mainly related to special plant fertilizers, iodine, lithium, potassium and industrial chemicals.
SQM began to produce lithium carbonate in 1997 and lithium hydroxide in 2005. It has rich experience and production technology of extracting lithium from salt lake brine.Its main business involves five sectors, including special plant fertilizers, iodine and its derivatives, lithium and its derivatives, industrial chemicals, potassium and its derivatives.
According to the research of Guojin Securities, the most important development node of SQM was to reach an agreement with Corfo in 1993 to acquire the right to exploit Atacama Salt Lake.High-quality lithium resources not only bring rich returns, but also establish the company's leading position in the lithium industry.
Source: Guojin Securities
Q1 performance has greatly exceeded market expectations, and the price of Q2 is expected to continue to rise.
According to Northeast Securities, SQM's performance in the first quarter of 2022 was a milestone, with revenue of $2.02 billion, up 282% from a year earlier, while net profit reached $796 million after paying $800m in Corfo fees and taxes, a tenfold increase over the same period last year. Prices rose in all business lines, with lithium prices rising significantly.
Source: northeast Securities
Of this total, the revenue of lithium business reached US $1.45 billion in the first quarter, an increase of 970% over the same period last year.Sales volume reached 38100 tons, an increase of 59% over the same period last year; the average selling price was $38000 per ton, an increase of 57.1% over the same period last year. 60 per cent of operating profits are spent on Corfo fees and taxes. It is the only business that can provide resources to the Chilean copper mine in proportion, reflecting a successful public-private partnership. We will continue to analyze and study new projects in the future. Investment plans will be reviewed and forecasts updated in the coming months, which is likely to increase resources for business development in Chile and abroad.
Source: northeast Securities
International fertilizer prices have been rising since 2021, rising to a higher level after the outbreak of the conflict between Russia and Ukraine, which led to a further tightening of supply. The rise in international fertilizer prices has directly led to a substantial increase in revenue and net profit of fertilizer producers, and SQM is also one of the beneficiaries.
In addition, the company said 20 per cent of its lithium sales were at fixed prices, 50 per cent were priced at index-linked variable prices (usually about three months behind spot prices), and the remaining 30 per cent had not yet been locked in.As the price of the 50% variable pricing part moves closer to the spot price, the company expects the price of Q2 to be higher than that of Q1 ($38000 / ton).
The lithium mine market is hot! Organization:Be optimistic about the high price of lithium and its persistence
On Saturday, the 54% auction for shares in Snowway Mining, which lasted nearly five days and five nights, was finally settled, with a transaction price of 2 billion yuan, which was 597 times the starting price of 3.35 million yuan.Once again, it shows the hot market of lithium resources.
Li Shuaihua, an analyst at Pacific Securities, recently released a research report and commented thatThe auction price far exceeded market expectations, indicating that the competition for lithium resources has been white-hot.
Industry insiders saidAt present, lithium ore has become a rare resource, and obtaining stable lithium resources is of great benefit to enterprises to stabilize supply, reduce costs and enhance market competitiveness.
The King Nonferrous and New Materials team believes thatBenefiting from the outbreak of demand for new energy vehicles and energy storage, the demand of 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 of slow production expansion.Be optimistic about the high price of lithium and its persistence.
CITIC said that the high premium deal of Snowway Mining shares auction highlights the current high-profile demeanor 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 continued rise in mineral prices to support lithium prices, lithium prices are expected to stop falling and rebound in the middle of the year.
Wall Street banks have raised their target prices since SQM released its "blowup" quarterly report.The average target price is $100.33, which is still 5 per cent higher than the current share price.
Source: Tipranks
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