On January 29, lithium giant Tianqi Lithium Corporation issued a performance forecast indicating a return to profitability. The announcement shows the company expects to achieve a net profit attributable to shareholders of listed companies ranging from 3.69 billion yuan to 5.53 billion yuan for the full year 2025. This represents a significant "V-shaped" reversal compared to the substantial net loss of 7.9 billion yuan incurred in 2024. For the same period, net profit after deducting non-recurring gains and losses is also forecasted to be between 2.4 billion yuan and 3.6 billion yuan.
This performance turnaround is primarily attributed to the company's systematic optimizations in areas such as vertical integration within the industrial chain, refined cost management, and handling exchange rate fluctuations. Despite continued pressure on lithium product market prices, the company successfully solidified its profit resilience during the industry's bottoming phase by adjusting the pricing mechanism for concentrate from its controlling subsidiary, accelerating the turnover of high-cost inventory while reducing procurement costs, and capitalizing on foreign exchange gains resulting from the Australian dollar's strength in 2025. Furthermore, the performance recovery of its associate company, Sociedad Quimica Y Minera De Chile SA (SQM), contributed significantly to increased investment income. Based on Bloomberg forecast data, SQM's full-year performance is expected to grow year-on-year, substantially boosting the investment income recognized by Tianqi Lithium under the equity method. Concurrently, a significant reduction in the scale of asset impairment provisions compared to the previous year also supported the profit recovery. The optimization of the pricing mechanism has markedly improved the cost structure. The key to Tianqi Lithium's return to profitability lies in successfully resolving the long-standing mismatch in industrial chain pricing. By shortening the pricing cycle for lithium concentrate from its subsidiary Talison, the company has aligned it more closely with the sales pricing rhythm of downstream lithium chemical products. This adjustment has significantly mitigated the profit erosion previously caused by the lag between locked-in procurement costs and changes in selling prices. As newly procured low-cost lithium concentrate is utilized and historical high-cost inventory is gradually consumed, the actual raw material costs at the company's various production bases can now more closely reflect current market prices. This change enables the company to maintain relatively stable processing margins even during a downward phase of lithium prices, effectively enhancing the main business's risk resilience and profit certainty amidst cyclical fluctuations. SQM investment income has become a crucial source of profit. Sociedad Quimica Y Minera De Chile SA (SQM), as a significant associate of Tianqi Lithium, is expected to contribute substantially increased investment income in 2025. Based on Bloomberg forecast data and benefiting from SQM's anticipated year-on-year performance growth, the investment income recognized by Tianqi Lithium under the equity method during this reporting period has increased significantly compared to the same period last year, serving as a major driver behind the turnaround to profitability. However, there is some uncertainty regarding the recognition of this investment income. As SQM follows the disclosure schedules for companies listed in both Chile and the US, the release of its official quarterly reports occurs later than Tianqi Lithium's current performance forecast. Currently, SQM and its joint venture partners are determining the proposed dividend distribution and reviewing related accounting impacts in accordance with agreements; this matter could affect its final net profit. Therefore, the investment income currently disclosed by Tianqi Lithium is a preliminary calculation based on forecast data and may differ from the actual figures. The final result will be subject to SQM's official announcements and Tianqi Lithium's audited annual report. Exchange rate fluctuations have yielded additional gains. The strengthening of the Australian dollar in 2025 contributed considerable foreign exchange gains to Tianqi Lithium's performance. As the company controls Talison, a globally significant spodumene mine in Australia, and holds US dollar-denominated debt, the sustained appreciation of the Australian dollar against the US dollar directly enhanced the value of its assets denominated in the local currency and increased the translation gains on its US dollar liabilities. This non-operating income increased significantly compared to 2024. This financial outcome highlights the strategic value of the company's global asset footprint. During a phase of cyclical adjustment in lithium product prices, the cross-regional asset and liability structure not only provided direct foreign exchange benefits but also objectively created a natural hedge against currency risk, strengthening the company's financial resilience and overall profit stability during the industry downturn.
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