Morgan Stanley Keeps Overweight Rating on Tianqi Lithium, Target Price HK$44.3

Deep News10-23

Morgan Stanley has released a research report noting that Tianqi Lithium (09696) announced preliminary net profit for the first nine months ranging between RMB 5.1 billion and RMB 6 billion, compared to RMB 180 million in the same period last year. Recurring net profit came in between RMB 5 billion and RMB 5.9 billion. The firm maintains its "Overweight" rating and target price of HK$44.3.

The bank estimates that Tianqi Lithium's third-quarter net profit ranged between RMB 860 million and RMB 1.76 billion, compared to RMB 2.37 billion in the second quarter, with the median of RMB 1.3 billion in line with the firm's expectations. The bank attributes the quarter-on-quarter slowdown to falling lithium prices, which declined by RMB 23,700 per tonne on a quarterly basis. It also noted that lithium prices fell faster than spodumene prices, which could affect processing margins during a downturn cycle.

The firm expects this headwind to persist into the fourth quarter, with lithium prices having fallen by RMB 19,500 per tonne quarter-on-quarter so far this quarter.

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