$TIANQI LITHIUM (09696.HK)$ KGI has a TA target of HKD61. Ti...

KGI has a TA target of HKD61.

Tianqi Lithium Corp, formerly Sichuan Tianqi Lithium Industries Inc, is a China-based company principally engaged in the R&D, manufacture and distribution of lithium products. Its products include two categories, lithium concentrate products and lithium compounds and derivatives. Lithium concentrate products include chemical grade and technical grade lithium concentrate. Lithium compounds and derivatives include lithium carbonate, lithium hydroxide, lithium chloride and lithium metal. The Company's products are used in a wide variety of end markets, primarily electric vehicles, energy storage systems, air transportation, ceramics and glass. The Company mainly operates its businesses in the domestic and overseas markets.

China is expected to account for nearly one-third of the world's lithium supply by the mid-2020s, with its output set to increase significantly, according to UBS AG. Chinese-controlled mines, including projects in Africa, are projected to raise production to 705,000 tons by 2025, boosting China's share of this vital mineral for EV batteries to 32% of the global supply. This race to secure lithium resources is driven by nations like the US prioritizing access to materials for battery production amid the global transition away from fossil fuels, with China's demand being particularly high as the world's largest market for NEVs.

China's EV sales almost doubled in 2022 with 87% YoY growth, with one in 4 cars sold in China being an EV in the same year, led by BYD. With factory activities resuming, production of EVs and lithium batteries would continue at a much higher capacity. China's EV sales are expected to exceed 8 m units in 2023. This would bring up the demand for Lithium to produce Lithium batteries for EVs.

Lithium carbonate prices rose past RMB200,000/ tone, extending its rebound from the 19-month low of RMB165,500/tonne on April 24th amid renewed optimism for electric battery demand. The recovery of lithium carbonate is also driven by seasonal repleniment of battery inventories.

1Q23 revenue rose to RMB11.45b, a 117.8% increase YoY. Net Income of RMB4.88b was up 46.49% YoY. Net profit Margin fell to 42.6%, down 9% YoY.

It has a consensus 12 mth tp of HKD77.37 according to Bloomberg.