天齐锂业：盈利复苏，自由现金流拐点可期

Brian Ho, CFA+852 2123 2615brian.ho@bernsteinsg.com Neil Beveridge, Ph.D.+852 2123 2648neil.beveridge@bernsteinsg.com RatingOutperform Hengliang Zhang+852 2123 2629hengliang.zhang@bernsteinsg.com Price Target Tianqi Lithium: Earnings recover with FCF inflection in sight The good: Tianqi Lithium returned to profitability in FY25 with net income to parent ofRMB458M (vs -RMB7,905M in FY24), which is aligned with the pre-released positive alert.The company continued to deliver solid operating cash flow of about RMB3.0bn (-47% y-o-y) and kept balance sheet risk contained with ND/E of roughly 18% at FY25. The keyGreenbushes CGP3 expansion (500ktpa, about +30% capacity) achieved first production inJanuary 2026 and is expected to reach full run-rate by mid-2026, underpinning a step-up inconcentrate volumes. Tianqi lifted lithium refining capacity from 92ktpa to 123ktpa (+33% y-o-y) as the Jiangsu hydroxide plant ramps, improving integration and leverage to higher-valueproducts. Management highlighted improving pricing dynamics with spot lithium carbonaterecovering from lows of USD10k/t in 4Q25 to current levels around USD21k/t which shouldsupport better profitability sequentially. The bad: The company generated negative FCF of RMB-786M (FY24: RMB-599M) as capextotaled RMB3.8bn (guidance: RMB3.5-4.0bn range), focused on the Greenbushes CGP3completion, Jiangsu hydroxide plant commissioning (30ktpa, completed July 2025). TheFebruary RMB5.2bn equity and debt funding strengthens liquidity but also signals scopefor higher capex intensity and potential M&A, raising execution and capital allocation risknear term. Despite the return to profit, Tianqi again proposed no FY25 dividend, broadly inline with expectations, but offering limited immediate cash return to shareholders while thecompany prioritizes growth and balance sheet flexibility. The bottom line: With CGP3 ramping and downstream capacity in place, Tianqi is enteringan earnings and FCF upcycle. We see room for 2026-27 earnings upgrades if lithiumprices hold and new capacity executes on time. While we expect earnings to increasesubstantially in 2026/27, we lower our EPS estimates and price target to reflect the recentshare issuance and near-term dilution. As such, we lower our price target from RMB83/sh toRMB73/sh for A-shares and HKD78/sh to HKD61/sh for H-shares. Investment Implications We rate Tianqi Lithium Outperform with PT of RMB73/sh for A-shares and HKD61/sh for H-shares. DETAILS Lithium concentrates •Revenue of RMB4,623M (-7% y-o-y) as higher volumes partially offset lower spodumene pricing•Greenbushes produced 1.36Mt of concentrate (FY24: ~1.26Mt), with chemical-grade at 1.28Mt and technical-grade at 80kt•Adjusted profit before tax of RMB4,166M (FY24: RMB5,143M, -19% y-o-y) maintained strong profitability on industry-leading cost position•Gross margin of 52.8% (FY24: 63.7%) as spodumene pricing averaged RMB6,000-7,000/t (USD850-1,000/t)•CGP3 achieved first production in January 2026, ramping to 500ktpa design capacity to boost total Greenbushes capacity to2.15Mtpa (+30%) Lithium compounds and derivatives •Revenue of RMB5,699M (-29% y-o-y) as lithium carbonate/hydroxide prices fell sharply, with spot averagingRMB70,000-80,000/t (FY24: RMB120,000-150,000/t)•Gross margin compressed to 28.4% from 35.1% last year•Adjusted loss before tax of RMB751M (FY24: RMB-2,746M loss), a 73% improvement as high-cost inventory was digested•Lithium refining capacity reached 123ktpa (up from 92ktpa) after Jiangsu hydroxide plant (30ktpa) completion in July 2025•Lithium chemical sales: ~103kt in FY25•Kwinana hydroxide plant ramped to 50%+ operating rate with ongoing optimization Unit economics and costs •Lithium compound average prices: RMB75,000/t (USD10,500/t), down from RMB150,000-180,000/t in FY24•Spodumene concentrate pricing: RMB6,400/t (~USD900/t LCE) vs RMB20,000-32,000/t at FY22-23 peaks•Greenbushes cash costs: USD400-500/t, well below marginal industry costs of USD800-900/t •Shortened pricing cycles reduced mismatch between concentrate costs and compound selling prices Capex and utilization •Total capex: RMB3,785M in line with RMB3.5-4.0bn guidance, focused on CGP3 (RMB2,428M), Jiangsu plant, andChongqing project•Legacy plants (Sichuan, Chongqing) at moderate utilization; newer facilities (Jiangsu, Kwinana) ramping to design rates Capital allocation •No dividend for FY25 given prior-year loss and growth focus•February 2026: raised HKD5.86bn (USD750M) via 65M new H-shares at HKD45.05 and convertible bonds for lithiumdevelopment, potential M&A, and working capital•Plans to sell up to 3.566M SQM Class A shares (1.25%) over next year while maintaining 21.9% stake FY26 operational guidance •CGP3 ramp-up through 2026 to reach 500ktpa design capacity, boosting total Greenbushes capacity to 2.15Mtpa (+30%)•Lithium chemical capacity (123ktpa) utilization improving as Jiangsu and Kwinana facilities optimize operations•Capex to moderate from FY25 levels