Tianqi Lithium (002466): Rights issue eases financial pressure

Tianqi Lithium (002466): Rights issue eases financial pressure

Tianqi Lithium Industry announced an allotment plan of placing 3 shares for every 10 shares to all shareholders (maximum of 3 shares).

400 million shares) will be set at 8.

The price of 75 yuan / share.

The net amount of the company’s rights issue 合肥夜网 after deducting issuance costs is intended to be fully repaid to purchase SQM23.

77% equity related M & A loans.

The application for the rights issue has been approved by the CSRC on August 30 this year.

  Review issue price is discounted from previous.

The company’s rights issue price is 8.

75 yuan / share, accounting for about 32% of the company’s latest closing price, with a high discount.

If the maximum number of shares is 3 this time.

Calculated with 400 million shares, the maximum raised funds for this rights issue is about 29.

9.8 billion yuan.

  Financial cost pressures eased.

The company acquired SQM with a time limit of 3.5 billion U.S. dollars in debt, and the pressure on budget expenditures increased significantly, with financial expenses from 0 in 2017.

55 ppm rose to 4 in 2018.

7 ppm, while 1-3Q19 financial costs are as high as 16.

5 ppm, a long-term increase of ten years ago5.

6x (3Q19 financial expenses 6.

400 million, up 28% from the previous month).

After the completion of the rights issue, the net proceeds raised will be used to repay SQM-related acquisition loans, and the company’s financial cost pressure will be eased by then.

  Helps optimize capital structure.

As of the end of the third quarter of this year, the company’s asset-liability ratio was about 75%, and net debt replaced 264%.

We estimate that if the company raises 29 shares this time.

The company’s asset-liability ratio and net debt ratio will drop to 69% and 192%, respectively, while the company’s asset-liability ratio and net debt ratio will decrease to $ 7 billion in the previous vertical of $ 7 billion.
61% and 131%.

  Lithium fundamentals are expected to recover.

The acceleration of European automobile electrification and 5G construction in 2020 is expected to drive the recovery of lithium consumption, while the difficulties in lithium mine operation in Australia will limit the increase in supply. We believe that the fundamentals of the lithium industry next year are expected to be repaired at the bottom.

In the first half of 2020, lithium concentrate inventories may inhibit the upward movement of lithium prices, but in the second half of the year, the fundamentals are gradually repaired. We expect that lithium carbonate prices may usher in a staged rebound.

  We maintain our profit forecasts for 2019 and 2020 unchanged.

It is currently expected to correspond to 40 in 2020.

0 times price-earnings ratio.

Maintain neutral rating and 25.

00 yuan target price, corresponding to 36.

2 times the 2020 price-earnings ratio, compared with 9 previously included.

4% downside.

  Risk lithium prices fell more than expected.