As an important subsidiary of Tianqi Lithium Corporation(002466) ( Tianqi Lithium Corporation(002466) ), sqm (Chilean chemical and mining company) exceeded expectations in the latest quarterly report and is expected to increase the performance of listed companies. In the announcement on May 22, Tianqi Lithium Corporation(002466) it is estimated that the net profit of listed companies will increase by 620 million yuan in the first half of this year.
sqm thickened semi annual performance
On May 19, sqm disclosed that the performance report for the first quarter of 2022 showed that the company achieved a net profit of US $796.1 million, equivalent to about RMB 5.376 billion, exceeding the previous estimate of Tianqi Lithium Corporation(002466) first quarter report, and it is expected that the net profit of Tianqi Lithium Corporation(002466) the first half of this year and the net profit attributable to the shareholders of the listed company will increase by about RMB 620 million.
Tianqi Lithium Corporation(002466) indicates that the expected increase of the above net profit is the result of the preliminary calculation of the company’s financial department and has not been audited by the audit institution; The operating performance data of the first quarter of 2022 disclosed by sqm has not been audited, and the final result is subject to the 2022 semi annual report of the listed company.
At present Tianqi Lithium Corporation(002466) holds about 23.02% of sqm’s class A shares and class B shares in total, which are accounted according to long-term equity investment and equity method Tianqi Lithium Corporation(002466) when preparing and submitting the first quarter report, sqm had not completed and submitted its first quarter report, and was unable to provide its first quarter financial data to the company due to compliance restrictions. Therefore, the listed company estimates the operating profit and loss of sqm in the first quarter through the financial calculation model and combined with the EPS and other information predicted by Pengbo news agency in the first quarter.
Sqm has a significant impact on Tianqi Lithium Corporation(002466) performance. In the first quarter of this year, Tianqi Lithium Corporation(002466) net profit reached 3.3 billion yuan, about 2.1 billion yuan higher than that of last year. The main factor for year-on-year turnaround is that the performance of the associated company sqm2022 in the first quarter of this year is expected to increase significantly year-on-year. According to the annual report, at the end of the period, the proportion of net assets held by Listed Companies in sqm was 4.869 billion yuan. Although the scale was smaller than other overseas asset targets, the investment income corresponding to sqm was as high as 760 million yuan.
On the day sqm disclosed its performance, the share price rose by 5.28 yuan / share on Tianqi Lithium Corporation(002466) 5 May 19, and fell on May 20.
derivatives transactions attract regulatory attention
On the other hand, Tianqi Lithium Corporation(002466) the prudence of sqm related derivative transactions and accounting treatment has also attracted regulatory attention.
Last year, Tianqi Lithium Corporation(002466) derivatives investment lost 496983 million yuan. Part of the B shares of sqm company held by the company are charged to Morgan Stanley to obtain a 3-year loan, and buy a put option equivalent to the amount of charged shares as a guarantee of loan repayment ability. At the same time, the company sells a call option equivalent to the amount of charged shares to hedge part of the financing cost. The above put options will all expire in 2022, and the listed company will transfer the relevant assets from other non current financial assets, Adjust the classification to trading financial assets.
In this regard, in the inquiry letter of Shenzhen Stock Exchange on the annual report of Tianqi Lithium Corporation(002466) 2021, it is required to explain the specific situation of hedging products and derivative financial instruments in recent three years, the compliance of reclassifying put options from other non current financial assets to trading financial assets, and the proportion of derivative investment amount and provision for impairment at the end of the reporting period is 0. It is required to explain whether there is any error.
On January 4, Tianqi Lithium Corporation(002466) convened the board of directors and agreed to authorize the management of the company to sell all the pledged class B shares of sqm to complete the due repayment of the collar option financing, and authorize the management to recover part of the remaining shares or sell all the remaining shares to recover cash according to the actual price, timing and other factors. As of the disclosure date of the annual report on April 30, Tianqi Lithium Corporation(002466) has completed the delivery of some collar options and repaid Morgan’s financing amount of about US $88.354 million.
lithium price rises sharply and capacity expansion
Sqm is the world’s leading producer of lithium chemical products, the largest producer of iodine and potassium nitrate, and the largest producer of lithium extraction from brine in the world. In 2018 Tianqi Lithium Corporation(002466) bought sqm23 77% equity, of which $3.5 billion was raised through syndicated loans and overseas funds, so it was burdened with debt. In addition, the subsequent decline in the price of lithium carbonate and the loss of sqm asset provision dragged down the performance of listed companies and the asset liability ratio increased; Until last year, the lithium price rose sharply, resulting in the reversal of the profits of listed companies, and sqm accelerated capacity expansion.
By the end of 2021, sqm’s effective capacity of lithium carbonate and lithium hydroxide in Chile was 120000 T / A and 21500 T / A. It is expected that the capacity of lithium carbonate and lithium hydroxide in the first half of 2022 is expected to increase to 180000 T and 30000 t respectively. In 2023, the capacity of lithium carbonate and lithium hydroxide will be further increased to 210000 T and 40000 t respectively.
As the second largest shareholder of sqm, Tianqi Lithium Corporation(002466) said that it is expected to obtain higher investment returns from its rapid capacity expansion.
During the investigation of the reception organization a few days ago, Tianqi Lithium Corporation(002466) executives predicted that the expansion speed of downstream battery manufacturers will be higher than that of upstream lithium supply in the next few years, and the production expansion cycle of downstream is shorter and that of upstream is longer, so the lithium supply will still be in a tight situation in the short to medium term. According to wood Mackenzie’s prediction, since 2021, the supply and demand has tightened year by year. By 2025, the supply gap will be about 100000 tons and will expand to more than 1 million tons by 2030.
At the same time, the lithium battery industry has also strengthened the upstream and downstream binding of the industrial chain. On May 9, Tianqi Lithium Corporation(002466) and China Innovation airlines, the third largest power battery factory in China, signed a strategic agreement. The two sides will carry out joint investment, cooperative research and development and other cooperation in battery cells and battery materials, new materials, lithium salts, lithium mines and other fields; On the other hand, Tianqi Lithium Corporation(002466) 5 on May 20, it was disclosed that the subsidiary tianqichuang lithium technology signed a cooperation agreement with Beijing Weilan New Energy Technology Co., Ltd., and the two sides will invest to establish a joint venture to jointly engage in the R & D, production and sales of pre lithium negative electrode materials and recycling, metal lithium negative electrode and lithium base alloy (composite) negative electrode materials, pre lithium reagent (raw materials) and pre lithium manufacturing equipment products.
