On July 14, Tianqi Lithium Corporation (ASX: 09696) unveiled an interim performance forecast that has captured significant attention across the A-share market.
The company anticipates a net profit attributable to shareholders of between 2.85 billion and 4.25 billion yuan for the first half of 2026, representing a staggering year-on-year increase of 3276% to 4935%.
Adjusted net profit is forecasted to be between 2.81 billion and 4.2 billion yuan, soaring by 212778% to 318081% compared to the same period last year.
This growth rate has temporarily placed it at the top of the A-share pre-earnings increase list.
On the same day, its industry peer, Ganfeng Lithium Group Co., Ltd., also released its forecast, expecting a first-half net profit of 3.65 billion to 4.6 billion yuan, marking a turnaround from a loss to a profit with growth of 787% to 966%.
The strong results from both lithium giants underscore robust industry conditions.
However, the capital market's reaction has been notably muted.
As of the close on July 16, Tianqi Lithium's H-share price was HK$33.68, up 1.45% for the day, with a market capitalization of approximately HK$57.701 billion.
Looking at the broader trend, the stock has declined nearly 35% year-to-date and has retreated approximately 51% from its early May peak of HK$69.15 per share.
This stark contradiction between exceptional financial performance and weak stock performance is the central paradox this analysis seeks to unravel.
Drivers of the Earnings Surge
The forecasted profit growth of over 32 to 49 times can be attributed to the convergence of three primary factors.
First, the company started from an extremely low profit base.
In the first half of 2025, Tianqi Lithium's adjusted net profit was a mere 1.32 million yuan.
As lithium prices rebounded from their lows and the average selling price of its products more than doubled, the year-on-year profit growth was dramatically amplified.
From January to June this year, the average spot prices for domestic lithium hydroxide and lithium carbonate reached 153,000 yuan/ton and 163,000 yuan/ton, respectively, up 126.9% and 131.5% year-on-year.
Second, the company maintains a highly concentrated business structure.
Unlike its peers who have diversified downstream or into other minerals, nearly all of Tianqi Lithium's revenue stems from lithium mining and lithium compounds, which accounted for 44.7% and 55% of its 2025 revenue, respectively.
This high concentration allowed the company to fully capture the benefits of the rising lithium price environment in the first half of the year.
Third, investment income from SQM played a significant role.
Tianqi Lithium holds approximately a 21.9% stake in the Chilean lithium mining giant SQM.
SQM operates the Atacama Salt Flat, one of the world's largest and highest-grade lithium brine resources.
According to Bloomberg forecasts, SQM's performance for the first half of 2026 is expected to show substantial growth, leading to a significant increase in the investment income recognized by Tianqi Lithium.
In the first quarter of 2026 alone, this investment income reached 475 million yuan.
It is evident that the extraordinary profit surge stems from the combined effect of a low base, high business concentration, and external investment gains.
Signs of this rebound were already apparent.
For the full year 2025, the company reported revenue of 10.346 billion yuan, down 20.80% year-on-year, but achieved a net profit attributable to shareholders of 463 million yuan, turning a profit compared to a loss in 2024.
With lithium product prices falling 21.03% for the year, the profit recovery in the second half was driven by a price rebound.
The 2025 net profit of 463 million yuan represented the second-lowest base in nearly a decade, setting the stage for the explosive growth in 2026.
The first quarter of 2026 served as a prelude to this surge, with revenue of 5.128 billion yuan (up 98.44% year-on-year) and net profit of 1.876 billion yuan (up 1699.12% year-on-year, 563.54% quarter-on-quarter), driven by a 74.81% quarter-on-quarter increase in battery-grade lithium carbonate prices.
The single-quarter profit for Q1 2026 already exceeded four times the full-year profit for 2025.
This remarkable turnaround is also underpinned by the company's formidable resource advantages.
Tianqi Lithium controls world-class lithium resources, including the Greenbushes spodumene mine, which is recognized for its high grade and large production capacity.
Following the commissioning of the Chemical Grade Plant 3 (CGP3) at the end of 2025, the total built capacity at Greenbushes increased from 1.62 million tonnes per year to 2.14 million tonnes per year.
CGP3 produced its first batch of qualified chemical-grade spodumene concentrate on January 30, 2026, with plans to ramp up to full capacity within the year.
Additionally, the company's stake in SQM provides exposure to the premium Atacama resource.
On the production front, the company's capacity is in a phase of expansion.
In 2025, Talison (operator of Greenbushes) produced 1.35 million tonnes of spodumene concentrate.
With CGP3 operational, total built capacity has reached 2.14 million tonnes per year and is currently ramping up.
For lithium chemical products, the 30,000-tonne-per-year lithium hydroxide plant in Zhangjiagang commenced operations in July 2025, raising the company's total built annual capacity for lithium chemicals to 121,600 tonnes.
The first phase of the Kwinana lithium hydroxide project in Australia is also in its ramp-up phase.
The company's global integrated lithium chemical product capacity is set to reach 122,600 tonnes per year.
While the performance explosion is clear, market concerns about the peak of the lithium price cycle have seemingly overshadowed the current earnings reality.
Shifting Market Narrative
Examining the broader industry context, lithium prices experienced a rally followed by a pullback in the first half of the year, highlighting the impressive nature of Tianqi's earnings against a backdrop of heightened market uncertainty.
According to SMM data, domestic battery-grade lithium carbonate prices exhibited wide fluctuations with an upward trend in the first half of 2026, averaging between approximately 149,600 yuan/ton and 177,000 yuan/ton.
Starting the year around 117,000-120,000 yuan/ton, the price reached an intra-year high near 200,000 yuan/ton in mid-May before retreating to the 156,000-160,000 yuan/ton range in June.
The average spot price for the first half was about 163,400 yuan/ton, up over 132% year-on-year.
As of July 14, the benchmark price for battery-grade lithium carbonate was approximately 153,000 yuan/ton.
A similar pattern was observed in spodumene concentrate prices, which rose from around $2,000/ton at the start of the year to a peak of $2,780-$2,840/ton in mid-May before falling back to the $2,385-$2,480/ton range in June.
Concurrently, the lithium mining sector has undergone a significant correction.
The Wind Lithium Mining Index fell 23.46% in May, 9.77% in June, and over 12% from July 1 to July 15.
This sustained decline reflects a shift in market focus from current fundamentals to longer-term supply and demand dynamics.
Expectations for increased supply, such as the resumption of production at mines in Jiangxi and the return of Zimbabwean spodumene concentrate shipments, are exerting downward pressure on long-term lithium price expectations.
In this environment, Tianqi Lithium's performance and valuation have diverged sharply, with its valuation now at historically low levels.
As of July 16, its trailing twelve-month price-to-earnings ratio was 22.85, and its price-to-book ratio was 1.099, both at relatively low points for the past decade.
Amid this performance-valuation disconnect, assessments of the company's investment value vary.
Some analysts, such as those from East Money Securities, maintain a positive view, citing Tianqi Lithium's position as a global integrated lithium leader with strong resources, cost advantages, global production layout, and strategic positioning in next-generation battery materials.
They argue that with global lithium capital expenditure at a low, frequent supply disruptions in key producing regions, and sustained strong demand from energy storage and steady growth from electric vehicles, the industry's supply-demand balance is expected to gradually improve from a state of oversupply.
As a leading company with high upstream resource self-sufficiency and strong profit elasticity, Tianqi Lithium is seen as well-positioned to benefit from a recovery in lithium price trends, leading to an initial "Buy" rating.
However, the predominant market concern remains focused on the long-term supply-demand outlook.
Lithium carbonate prices have already retreated from their May high of 200,000 yuan/ton to around 160,000 yuan/ton in June.
If prices continue to weaken in the second half of the year, a sequential decline in Q3 and Q4 earnings is highly probable.
Previous forecasts, such as one from Daiwa predicting a global lithium surplus of 54,000 tonnes for 2026, add to these concerns.
The anticipated concentrated resumption and expansion of lithium mining capacity, both domestically and internationally, is expected to reverse the supply tightness seen in the first half of the year.
Key Takeaways
In summary, while Tianqi Lithium's forecast of a 32 to 49-fold half-year profit increase has made waves, the concurrent reality of a more than 35% stock decline year-to-date and a roughly 50% drop from its peak reveals a colder market logic.
The stellar results are largely a product of a low base, high business concentration, and SQM investment gains—a powerful but potentially non-recurring convergence of factors rather than a sustainable trend reversal.
At the industry level, with lithium prices retreating from their highs, expectations of future supply increases have replaced current high profitability as the primary pricing driver.
Even with its ownership of world-class resources like Greenbushes and exposure to Atacama, an ongoing capacity ramp-up, and a valuation compressed to multi-year lows, the market remains skeptical.
For cyclical stocks, the greatest fear is not poor performance, but that the peak of earnings coincides with a market narrative that has already moved on to anticipating the next downcycle.
The convergence of Tianqi Lithium's "earnings peak" and "stock price trough" will ultimately depend on the market's belief that this profit recovery represents the beginning of a new, sustainable cycle with a higher earnings base, rather than the final surge at the end of the previous one.
Ultimately, stock prices are not set by past glories but by voting on future marginal changes.
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