Maintain an “Overweight” rating. Maintain an “Overweight” rating. In 2023, the company achieved operating income of 40.503 billion yuan (YoY +0.13%); realized net profit to mother of 7.297 billion yuan (-69.75% YoY). Based on the forecast for a decline in lithium prices, the company's 2024-2025 EPS is predicted to be 2.16/2.60 yuan (originally 4.19/4.36 yuan), respectively, giving the company 3.08 yuan EPS in 2026. Referring to the industry average and the valuation premium brought about by the company's high-quality resources in the industry, the 2024 PE valuation was given 26 times, the target price was lowered to 56.16 yuan, and the “gain” rating was maintained.
The decline in lithium prices reduced gross profit, and SQM's investment income declined year over year. Lithium concentrate production/sales/inventory was 152.23/84.47/409,400 tons, +12.9%/+11.3%/+38.3% YoY; lithium salt production/sales/inventory was 5.07/5.67/132,000 tons, +7.3%/-2.5%/+350.3% YoY. Gross profit: The gross margin of lithium concentrate was 90.44%, +6.49% year over year; the gross margin of lithium salt was 73.85%, -12.00% year over year. SQM's investment income declined year over year; asset impairment losses amounted to $730 million.
The amount of lithium resources in the Australian mine has been renewed and increased, and the Yajiangzola project continues to advance. The company's Australian Greenlithium spodumene resources increased from 12.86 million tons to 16 million tons; reserves increased from 8.24 million tons to 8.5 million tons. Shenghe Lithium, a wholly-owned subsidiary, obtained the registration for the Cuola Spodumene Mine Tebaigou Tailings Depot Project to enhance its ability to guarantee production capacity and resources for lithium compounds.
Lithium chemicals are being developed in an orderly manner, and integrated construction is smooth. The company's total annual production capacity for lithium compounds and derivatives is 88,800 tons, with a planned production capacity of 143,800 tons. In addition to the three factories in Shehong, Zhangjiagang, and Chongqing, which have been in mature and stable operation for many years, the Suining Anju Plant has confirmed that it has produced products that meet battery-grade lithium carbonate standards. Kwinana Phase I lithium hydroxide products in Australia have obtained sample delivery customer certification, and delivery began in January 2024.
Risk warning. Sales of new energy vehicles fell short of expectations, and production capacity construction progress fell short of expectations.