Edit | Yang

Producer | tide-biz

In recent years, the biggest industry outlet is non-new energy vehicles.

Since April 2020, the new energy vehicles in China have been growing continuously, and finally the annual production and sales volume reached a record high. This upsurge not only sent the market value of the battery leader Contemporary Amp Technology Co., Ltd. to trillions, but also ignited the upstream industrial chain such as battery separator, anode and cathode materials, including the upstream core product lithium salt.

Lithium is the most important raw material for producing power batteries, just as oil is to fuel vehicles, it is called "white oil" for new energy vehicles.

Driven by booming market demand, in the fourth quarter of 2020, the price of lithium carbonate bottomed out and began to rise all the way. At present, the market price is around 80,000/ton, which has nearly doubled compared with the third quarter of last year. Choice lithium carbonate index shows that the current price is close to the price of 20 18.

The share prices of A-share lithium salt companies have also soared-the share prices of Shengxin Lithium Energy, Yahua Group and Ganfeng Lithium Industry have all doubled in just half a year. Among them, Tianqi Lithium Industry (SZ:002466), once the largest lithium producer in Asia, saw its share price increase by more than 2.5 times during this period, with the fiercest increase.

Although the share price has exceeded the new high since the listing of 20 13, Tianqi lithium industry is still in a state of large losses, not far from the crisis. When the price of lithium was at an all-time high in 2065438+2008, Tianqi Lithium Industry was burdened with huge debts due to a "snake swallowing elephant" overseas acquisition, and it has not yet got out of the debt quagmire.

Although lithium is the most important and indispensable material in the era of new energy vehicles, its strong periodicity contains great opportunities and risks. Taking the price of lithium carbonate as an example, the cyclical high price in the first quarter of 20 18 is almost four times that of the cyclical low price in the third quarter of 2020, and there is a great difference between the peak and the trough.

With the recovery of lithium salt price, the development of Tianqi lithium industry has also ushered in a new turn. However, there is still uncertainty about whether the price of lithium can continue to rise and whether the transaction of introducing war investment can be finalized. Tianqi lithium industry, which "slipped" at the peak of mining cycle, still has several difficulties to overcome.

Generally speaking, the development of mining companies is inseparable from the continuous acquisition of new mineral resources, and so is Tianqi lithium industry. In the course of its development, the two most critical nodes of the resumption came from the acquisition of "Snake Swallow Elephant".

Back in 2004, founder Jiang Weiping took over Shehong Lithium Industry, a small county-run lithium salt processing factory in Sichuan, and renamed it Tianqi Lithium Industry, and boarded the small and medium-sized board of Shenzhen Stock Exchange on 20 10 and 10. In that year, its revenue was less than 300 million and its net profit was less than 50 million.

The first acquisition three years later made Tianqi lithium industry achieve leap-forward development.

At the end of 20 12, the total assets of Tianqi lithium industry were only156.9 billion yuan, and the stock market value was only 3.5 billion yuan. However, in 20 13, Tianqi Lithium raised 4 billion yuan through private placement, and finally acquired the equity of upstream supplier Tellison 5 1% at the price of 30.4 1 100 million yuan. Tellison is one of the largest owners and suppliers of solid lithium mines in the world.

It has mastered the global advantage of spodumene mineral resources and inserted "soaring wings" for the development of Tianqi lithium industry. From 20 14 to 20 17 after the acquisition, Tianqi lithium's net profit soared from 1.3 1 100 million yuan to 2145 million yuan, making it a global lithium giant.

According to Roskill's report, Tianqi Lithium Industry is the third largest lithium compound producer in the world and the largest lithium compound producer in Asia and China according to the output of 20 17.

Tianqi lithium industry, which tasted the sweetness from the merger, opened the next "snake swallowing elephant" merger.

From 20 18 to 12, Tianqi Lithium acquired 23.77% of the global salt lake giant Chile Mining and Chemical Industry (NYSE: SQM) for US$ 4.066 billion (about RMB 27.844 billion) and became the second largest shareholder of SQM.

Among them, only $2.41100 million comes from Tianqi Lithium's own funds, and $3.5 billion comes from domestic and foreign syndicates led by CITIC Bank, with a capital leverage of 6. 1.8 times. It is also a leveraged buyout, but this time, Tianqi Lithium Industry is no longer a "lucky dog".

Affected by the release of new capacity of lithium salt and the decline of domestic subsidies for new energy vehicles, the price of lithium ore and mid-stream smelting continued to adjust back in 20 19. Affected by this, SQM's performance failed to meet expectations, and Tianqi Lithium Company accrued a huge amount of goodwill impairment of 5.279 billion yuan, resulting in a loss of 5.983 billion yuan in 20 19.

What followed was huge debt pressure. The $3.5 billion M&A loan will generate interest expenses as high as 2.045 billion yuan and 654.38+398 billion yuan in the first three quarters of 2065 and 2020.

In this context, Tianqi Lithium Industry unexpectedly appeared loans overdue, and continued to realize a loss of 2.27 billion yuan to 65.438+0.36 billion yuan in the 2020 performance forecast.

The serious sequela of sky-high M&A is not because the acquired assets are of low quality.

In fact, SQM is the only company in the world that has two or two companies that can mine lithium in Atacama Salt Lake, and the Atacama Salt Lake in northern Chile is the salt lake with the highest lithium concentration, the largest reserves and the most mature mining conditions in the world. Even the domestic industry generally recognizes that Tianqi Lithium's assets acquired overseas twice in eight years are high-quality assets.

According to the data of Roskill and SQM, in which Tianqi shares hold 25.86%, the cost of extracting lithium to produce lithium carbonate is less than half that of Ganfeng Lithium Industry (SZ:002460).

However, Tianqi lithium industry used excessive leverage under the condition of insufficient funds, and on the other hand, in the continuous high boom, it formed an overly optimistic expected judgment on the future lithium price, ignoring the power of the cycle.

The price trend of lithium carbonate in the past few years can be seen. The price of lithium carbonate has been rising and prospering since the beginning of 20 16, but it has been falling since the beginning of 20 18.

"Everything is cyclical, and the cycle is both supply and demand."

In fact, the cycle is long or short, strong or weak, and there are almost no industries that are completely out of cycle.

At present, Sany Heavy Industry, the leader of excavator machinery, has experienced a sharp decline year by year, and the number of employees has decreased by nearly 70% in the case of stagnant infrastructure and shrinking real estate investment in 2012/2015.

At present, the automobile industry in China, where sales growth is stagnant or even declining, has maintained rapid growth for more than ten years, and many automobile companies have made a lot of money.

Even consumer goods that are considered to have stable market demand, such as high-end liquor, are affected by macroeconomic development, various investment projects and commercial activities, showing a weak periodicity.

Mining has always been classified as a cyclical industry with strong periodicity. Dancing with the cycle and grasping the law of industry cycle has become a compulsory course for the whole industry.

The downstream of the lithium industry chain mainly includes 3C consumer goods such as mobile phones, laptops and digital cameras, new energy vehicles and energy storage batteries, among which the new energy vehicle market is considered to be one of the most promising lithium battery application markets at present, and it is also an important direction and general trend for future development.

However, the development of any strategic emerging industry is not linear and gradual, and it is easy to have various obstacles, repetitions and retrogression in the middle, thus bringing disturbances and periodic changes to the whole industrial chain.

In fact, before and after Tianqi Lithium Industry proposed to acquire SQM, although the price of lithium was still at a cyclical high point, the lithium salt market was abnormal.

In 20 17, the gross profit margin of lithium chemical products in Tianqi lithium industry was 69.4 1%, while the gross profit margin of lithium mineral products was as high as 7 1.77%, and the gross profit margin began to appear upside down for the first time. The abnormal phenomenon of "selling products is not as good as selling raw ore directly" has shown that the abnormally high profit level of lithium ore is difficult to maintain for a long time.

Sure enough, under the temptation of huge profits, domestic listed companies began to set foot in lithium-related industries. Ganfeng Lithium, Rongjie, Zangge Holdings, Xiaolan Technology, Huayou Cobalt and other companies have made huge investments and capacity expansion around spodumene mine, lithium salt lake, lepidolite and related industries respectively.

At the same time, overseas lithium mining giants SQM, Yabao and FMC are also stepping up their efforts to restore production capacity and share this tempting cake.

Subsequently, China adjusted the subsidy policy for new energy vehicles in 20 19, and the downstream demand for lithium carbonate shrank. However, the upstream lithium minerals can expand, resulting in oversupply, and the lithium price will enter a downward trend.

After Tianqi Lithium acquired SQM, although it has high-quality lithium-rich ore in salt lake, with the continuous decline of lithium ore price, the profit margin of SQM has been continuously compressed, and its share price has also begun to fall with the price of lithium. Tianqi lithium industry then fell into debt trouble.

On the other hand, competitor Ganfeng Lithium didn't start the acquisition until 20 19, when the lithium mine was at the cycle low point. In that year, Ganfeng Lithium made five acquisitions, including some shares of mining companies such as Australia's Pilbara Company, RIM Company, Argentina's MineraExar Company and Bacanora Company.

After a series of investments by M&A, Ganfeng Lithium Industry has surpassed Tianqi Lithium Industry to become the third largest lithium compound producer in the world, the largest lithium metal producer in China and the largest lithium metal producer in the world. At present, the lithium resource of Ganfeng Lithium Industry is about 20.59 million tons, which exceeds the 6.5438+0.607 million tons of Tianqi Lithium Industry.

In the fourth quarter of 2020, the price of lithium experienced the last "decline" at the end of the year, and then began to rise. Tianqi Lithium's share price has also soared, and has exceeded the new high since the listing of 20 13.

But then, the share price of lithium salt enterprises began to follow the new energy sector, with a sharp decline and retracement. Even with the rise of lithium price, there has been a situation that "the spot price of lithium rises every day and the cyclical stocks fall every day".

Tianqi Lithium's share price continued to fall from the highest point of 70. 13 yuan, and the lowest retreated to 35.58 yuan.

Some investors pointed out that the huge increase in the new energy sector stems from the strong optimistic expectation of DCF (discounted cash flow model) valuation. This valuation method almost takes into account the growth space for many years to come, and the excessive increase has overdrawn the future expectations.

It can be seen that SQM, which has the highest lithium concentration, the largest reserves and the most mature mining conditions in the world, has not yet recovered to the highest point in history. For Tianqi Lithium Industry, which is still in the debt crisis and the debt crisis has not been lifted, it is more difficult to maintain or even break through the highest point in history.

According to the performance forecast, the net loss attributable to shareholders of listed companies in Tianqi Lithium Industry in 2020 is about 65,438+0.36 to 2.27 billion, a year-on-year change of 62% to 77%. The restructuring transaction with IGO is expected to be completed on 202 1, and there are still variables and uncertainties.

Whether Tianqi lithium industry can get out of the debt quagmire will depend on its future performance and lithium price prosperity.

At present, it seems that the recovery of lithium market in the next two or three years is a high probability event, and Tianqi lithium industry is also very likely to get out of the bottom of its performance on 20 19.

However, the price of lithium has reached about 80,000/ton, which is close to the level of 20 18. I'm afraid it's hard to keep rising.

With the follow-up of technologies such as extracting lithium from salt lakes, it is easier to expand the production of lithium salts. Once the price of lithium continues to rise, enterprises will expand their production capacity accordingly.

The Report on the Development of Lithium Industry in China in 2020 issued by China Nonferrous Metals Industry Association shows that the global output of lithium and its derivatives in 2020 is equivalent to 42 1.600 tons of lithium carbonate, an increase of 1.83% year-on-year.

The global lithium giant Yabao also pointed out in the conference call in the fourth quarter of 2020 that the price of lithium in 20021year is expected to be slightly lower than that in 2020.

In the current restless capital market environment, it is difficult to convince investors only by the rise of product prices. Only a steady quarterly report can reassure investors.

After giving the market enough hope and expectation, and gaining the support and favor of the capital market, Tianqi Lithium Industry may start to counterattack.