Tianqi Lithium Corporation delivered a first-quarter 2026 financial report characterized by a clear "volume and price synergy." Revenue reached approximately RMB 5.128 billion, a substantial increase of 98.44% year-over-year. Net profit attributable to shareholders surged to about RMB 1.876 billion, skyrocketing by 1,699.12% compared to the same period last year. Against the backdrop of a low base in the prior-year period, the significant rise in the average selling price of the company's primary lithium products directly boosted revenue and gross profit, serving as the core driver behind the earnings leap.
During the quarter, the company completed a new H-share placement and issued H-share convertible bonds: it placed 65.05 million H-shares at HKD 45.05 per share and issued convertible corporate bonds with a total principal amount of RMB 2.6 billion. Concurrently, the third-phase chemical-grade lithium concentrate expansion project at Talison entered its ramp-up phase, and the cooperative transaction between SQM and Codelco officially took effect (following the final adjudication against Tianqi in the Chilean lawsuit). This period saw simultaneous progress on the company's two main strategic fronts: "capacity expansion" and "overseas interests." This quarterly report is unaudited.
**Direct Driver of Doubled Revenue: Rising Lithium Product Prices Boost Gross Profit Recovery**
The company attributed the significant revenue growth to a "substantial increase in the average selling price of major lithium products compared to the same period last year." Based on financial statement calculations, the first-quarter cost of revenue was approximately RMB 1.915 billion, resulting in a gross profit of about RMB 3.213 billion and a gross margin of around 62.7%. This compares to a gross margin of approximately 44.3% in the prior-year period, representing a recovery of nearly 20 percentage points, clearly demonstrating the positive impact of pricing on profitability. On the expense side, selling expenses were approximately RMB 2.08 million, general and administrative expenses were about RMB 132 million (a year-over-year decrease), and R&D expenses were around RMB 12.88 million (a year-over-year increase). The overall expense ratio remained low, allowing the improvement in gross profit to flow more directly to the bottom line. The company disclosed that the third-phase chemical-grade lithium concentrate expansion project at Talison was completed and commenced trial production on December 18, 2025, with the first batch of standard-compliant chemical-grade lithium concentrate produced on January 30, 2026. Subsequent efforts will focus on accelerating the production ramp-up and ongoing debugging and optimization to achieve continuous and stable production. For lithium industry companies, the pace of transitioning from project "commissioning" to "stable and full-capacity production" often directly impacts costs, supply stability, and delivery capabilities to downstream customers.
**More Than Just Lithium Prices: SQM Investment Income and Negative Finance Costs Amplify Profit Growth**
Several key "incremental items" on the income statement warrant separate analysis:
* **Significant Increase in Investment Income:** Investment income for the period was approximately RMB 475 million, an increase of about RMB 323 million year-over-year. Income from investments in associates and joint ventures accounted for approximately RMB 428 million of this total. The company stated in its "reasons for changes" that, based on Bloomberg forecast data, SQM's first-quarter 2026 performance is expected to show substantial year-over-year growth, leading to a corresponding increase in the investment income recognized from SQM. * **Finance Costs Turn Negative:** Finance costs for the period were approximately -RMB 151 million, compared to +RMB 27.24 million in the same period last year. This shift alone provided a significant boost to operating profit (the specific breakdown into components like foreign exchange gains/losses was not detailed in the excerpt). * **Impairment Items Contribute Positively:** The asset impairment loss line item showed a positive contribution of +RMB 114 million (a positive value per the statement presentation), a marked improvement from the prior-year period (-RMB 20.79 million), indicating that net reversal of impairments/reduction in impairment losses supported profits.
Ultimately, the company achieved an operating profit of approximately RMB 3.736 billion and a total profit of about RMB 3.748 billion. Net profit attributable to shareholders was approximately RMB 1.876 billion. It is important to note that net profit attributable to non-controlling interests was about RMB 965 million, representing a significant portion of total net profit. This reflects that a portion of the profits primarily resides at the subsidiary level, indicating a noticeable "diversion" between the profit attributable to shareholders and the consolidated profit.
**Core Operating Profit Nearly Equals Net Profit: Non-recurring Items Mainly from SQM Asset Disposal**
Total non-recurring gains and losses for the first quarter amounted to approximately RMB 60 million, having a relatively limited impact on net profit attributable to shareholders. The composition primarily included:
* Gains/Losses on disposal of non-current assets of about RMB 75.51 million: explained by the company as gains from the disposal of long-term equity investments related to the sale of SQM Class B shares; * Government grants of approximately RMB 16.74 million; * Total fair value changes and disposal gains/losses related to hedging activities (e.g., futures, foreign exchange hedging) of approximately -RMB 42.66 million; * Net other non-operating income/expenses, etc.
Net profit attributable to shareholders after deducting non-recurring items was approximately RMB 1.816 billion. This indicates that the profit improvement stems more from the simultaneous uptick in operational performance and investment income from associates, rather than being significantly "polished" by one-off items.
**Financing Activities Completed: Placement of 65.05 Million H-Shares + RMB 2.6 Billion Convertible Bond Issue, Share Capital Expands ~4%**
To meet business development needs, the company completed two key financing transactions under a general mandate in February:
* Placement of 65.05 million new H-shares at HKD 45.05 per share; total H-share capital increased from approximately 164 million shares to about 229 million shares, while the company's total share capital increased from roughly 1.641 billion shares to about 1.706 billion shares. * Issuance of convertible corporate bonds with a total principal amount of RMB 2.6 billion, which are convertible into the company's H-shares. Subsequent approvals were obtained for the listing of these bonds on the Vienna Stock Exchange and for the listing and trading of the conversion shares on the Hong Kong Stock Exchange.
The capital expansion is directly reflected in the financial statements: increased share capital and increased capital reserve. Furthermore, potential future conversion of the bonds could lead to additional dilution, which investors need to assess comprehensively considering the company's profit cycle and share price level.
**SQM and Codelco Partnership Finalized: Post-Final Legal Defeat, Entering Phase of 'Dynamic Investment Value Assessment'**
Regarding the cooperation between SQM and Codelco in the Atacama Salt Flat, Tianqi's Chilean entity had previously unsuccessfully petitioned regulators to convene an extraordinary general meeting and pursued litigation within the Chilean court system. The company disclosed that on January 27, 2026, the Supreme Court of Chile upheld the original ruling, rejecting Tianqi's Chilean entity's appeal, making this judgment final. On the same day, SQM disclosed that the conditions precedent for the merger of its subsidiary, Nova, with a Codelco subsidiary had been satisfied, and the transactions under the "Partnership Agreement" became effective. The company stated that the dismissal of the appeal does not alter the assumptions related to the impairment testing of its long-term equity investment in SQM and is not expected to materially impact current profits. However, it will continuously and dynamically assess the value changes of its long-term investment in SQM based on subsequent transaction developments and future market conditions, while reserving potential paths to protect its rights. For Tianqi, the SQM equity investment is both a significant source of profit and signifies an ongoing sensitivity of its performance to operational, policy, and partnership framework changes affecting its overseas asset.
Comments