Net profit pre-increased by more than 32 times vs. stock prices fell by more than 35% during the year. Why didn't the market behind Tianqi Lithium (09696)'s huge profit buy it?

On July 14, Tianqi Lithium (09696) revealed a report card sufficient for the entire A-share market: net profit of 2.85 billion yuan to 4.25 billion yuan in the first half of 2026 is expected, up 3276% to 4935% year on year; net profit after deduction is estimated to be 2.81 billion yuan to 4.2 billion yuan, up 212778% to 318081% year on year. This growth rate weighed on Jiang Bolong, which had previously attracted widespread attention in the market, and is temporarily at the top of the A-share pre-increase list.

On the same day, Ganfeng Lithium, another “leader in the lithium industry,” also revealed a performance forecast. Net profit from the mother is expected to be 3.65 billion yuan to 4.6 billion yuan in the first half of the year, an increase of 787% to 966% over the previous year, turning a year-on-year loss into a profit. There is no doubt about the prosperity of the lithium industry.

However, the reaction of the capital market was intriguing. As of the close of trading on July 16, Tianqi Lithium's H shares were reported at HK$33.68, up 1.45% during the day. The latest market value was HK$57.701 billion. However, if you look at it for a long time, the stock price has dropped nearly 35% cumulatively since this year. What is even more shocking is that compared to the high of HK$69.15 per share in early May, the retracement was as high as 51%.

They are the most beautiful in terms of performance, yet their stock price performance is unsatisfactory — this extreme contrast is the core contradiction this article is trying to resolve.

The reason for the surge in performance: over 32 times increase under the resonance of three factors

Looking at Tianqi Lithium's latest performance forecast, we can see that the profit increase of more than 32 to 49 times is a combination of three core factors.

First, a very low profit base. In the first half of 2025, Tianqi Lithium withheld non-net profit of only 1.32 million yuan. When lithium prices rebound from the bottom and the average price of products doubled, the year-on-year increase in profit was naturally greatly amplified. From January to June of this year, the average domestic spot prices of lithium hydroxide and lithium carbonate reached 153,000 yuan/ton and 163,000 yuan/ton respectively, up 126.9% and 131.5% from the same period last year.

Second, a highly centralized business structure. Unlike Ganfeng Lithium's downstream expansion and Salt Lake Co., Ltd.'s potassium-lithium combination, almost all of Tianqi Lithium's revenue comes from lithium ore and lithium salt — these two major products accounted for 44.7% and 55% of revenue respectively in 2025. The higher concentration of lithium business allowed Tianqi Lithium to fully reap the dividends in the environment of rising lithium prices in the first half of the year.

Third, SQM's return on investment. Tianqi Lithium holds about 21.9% of Chilean lithium mining giant SQM. Atacama Salt Lake, owned by SQM, is one of the world's largest reserves and best endowment salt lake resources. According to Bloomberg's forecast data, SQM's performance for the first half of 2026 is expected to increase significantly year-on-year, and the investment income confirmed by Tianqi Lithium will increase significantly. In Q1 2026, the company's investment income reached 475 million yuan.

It is easy to see that this exaggerated profit increase stemmed from the triple resonance of Tianqi Lithium's low profit base, high business concentration, and the increase in earnings from external investment.

But in fact, there are already signs that Tianqi Lithium will break out in the first half of 2026.

Throughout 2025, Tianqi Lithium achieved operating income of 10.346 billion yuan, a year-on-year decrease of 20.80%; net profit to mother was 463 million yuan, +105.85% year-on-year, turning a loss into a profit. Prices of lithium products fell 21.03% year-on-year throughout the year, but the recovery in lithium prices in the second half of the year led to a recovery in profitability. Net profit returned to mother in 2025 was only 463 million yuan, and the profit base was at its lowest point in nearly ten years — this just paved the way for explosive growth in 2026.

Q1 2026 was a prelude to its performance explosion. In the first quarter of 2026, Tianqi Lithium achieved revenue of 5.128 billion yuan, up 98.44% year on year; net profit to mother was 1,876 billion yuan, up 1699.12% year on year and 563.54% month on month. The price of battery-grade lithium carbonate rose 74.81% month-on-month, leading to an explosion of performance. The net profit for the first quarter in a single quarter has exceeded four times the net profit for the full year of 2025.

Of course, Tianqi Lithium was able to turn losses into profits in 2025 to pre-increase net profit by more than 32 times in the first half of 2026. It is inseparable from its resource endowments to create a moat.

According to Zhitong Finance, Tianqi Lithium holds the world's top lithium resources and controls the Greenbush spodumene mine, the world's highest grade spodumene mine with the highest production capacity. With the completion and commissioning of Chemical Grade Lithium Concentrate Plant No. 3 (CGP3) in late 2025, Greenbush's lithium concentrate production capacity has jumped from 1.62 million tons/year to 2.14 million tons/year. CGP3 produced the first batch of chemical-grade lithium concentrate products that meet the standards on January 30, 2026, and plans to complete the production capacity climb within 2026. At the same time, the company also holds approximately 21.9% of SQM's shares. SQM has mining management rights for Chile's Atacama Salt Lake, the world's largest lithium salt lake. The salt lake has high lithium concentration, large reserves, and low mining costs, and is one of the most endowed salt lake resources in the world.

Furthermore, the company's production capacity is in the process of being released. Lithium concentrate side: In 2025, Thalison produced a total of 1.35 million tons of lithium concentrate. After the CGP3 was put into operation, the total production capacity of Greenbush reached 2.14 million tons/year, and it is in a continuous climbing phase. Lithium chemical side: The 30,000 ton lithium hydroxide plant in Zhangjiagang was completed and put into operation in July 2025, and the annual production capacity of the company's lithium chemical products increased to 121,600 tons; Australia's Quinana Phase I lithium hydroxide project is also in the climbing phase. The total global production capacity of the company's comprehensive lithium chemical products will reach 122,600 tons/year.

From the above data, it is easy to see that the sharp rise in Tianqi's performance is due to multiple short-term factors resonating, but the market's concerns about the peak of the lithium price cycle have surpassed the reality of the current performance explosion.

Market logic shift: from “immediate profit” to “long-term excess”

Looking at the industry trend of Tianqi Lithium, lithium prices soared and fell in the first half of the year, and as differences between long and short markets continued to intensify, this further highlights the difficulty of its sharp rise in performance.

According to SMM statistics, in the first half of 2026, domestic battery-grade lithium carbonate prices showed a wide fluctuation and a central upward trend, with an average price range of about 149,600 yuan/ton to 177,000 yuan/ton. At the beginning of the year, it ranged from about 117,000 yuan to 120,000 yuan/ton. In mid-May, it hit a high of 200,000 yuan/ton during the year. The average spot price of lithium carbonate in the first half of the year was about 163,400 yuan/ton, up more than 132% from the same period last year.

In June, prices fell back to the range of 156,000 yuan to 160,000 yuan/ton. As of July 14, the benchmark price for battery-grade lithium carbonate was about 153,000 yuan/ton. The lithium ore side also showed an upward and downward trend — the SMM spodumene concentrate index started at about $2,000 per ton at the beginning of the year, surged to an annual high of 2,780-2,840 US dollars/ton in mid-May, and fell back to the $2385-2480 range in June.

At the same time, the lithium sector also continued to recover deeply. Among them, the Wande lithium index fell 23.46% in May, 9.77% in June, and continued to fall by more than 12% from July 1 to July 15.

In fact, behind the continued pullback in the lithium sector is a shift in the focus of market transactions — the focus of current market transactions is no longer on this year's fundamentals, but on the long-term supply and demand situation. New supply expectations, such as the resumption of lithium production in Jiangxi and the return of lithium concentrate from Zimbabwe to Hong Kong, continue to suppress long-term expectations for lithium prices.

Under such a market environment, Tianqi Lithium's performance and valuation also showed an extreme divergence. The valuation had been relatively low for nearly ten years: as of the close of July 16, Tianqi Lithium's price-earnings ratio was 22.85 times TTM and the net market ratio was 1.099 times, all of which were relatively low in the past ten years.

In the midst of such differences in performance and valuation, how do you view the investment value of Tianqi Lithium?

Among them, Dongfang Wealth Securities said that Tianqi Lithium, as a global leader in lithium resource integration, has strong resource endowments, low cost advantages, global lithium chemical production capacity layout, and forward-looking card capacity for next-generation battery materials. At the industry level, with global capital expenditure on lithium resources entering a low point, supply disturbances in major overseas and domestic production areas are frequent, compounded by continued high energy storage demand and steady growth in power battery demand, the supply and demand pattern of the lithium industry is expected to gradually shift from bottom-side easing to marginal improvement. As a leading enterprise with a high self-sufficiency rate of upstream resources and strong profit flexibility, the company is expected to fully benefit from the restoration of the lithium price center. For the first time, coverage was given.

However, it should be noted that the market's biggest concern still comes from long-term supply and demand. The price of lithium carbonate has risen from 117,000 yuan/ton at the beginning of the year to a high of 200,000 yuan/ton in May, and fell back to around 160,000 yuan in June. If lithium prices continue to weaken in the second half of the year, a month-on-month decline in Q3 and Q4 results is a probable event. Earlier, Yamato predicted an oversupply of 54,000 tons of global lithium in 2026. Domestic and foreign lithium production capacity ushered in a cycle of concentrated resumption of production and release, completely reversing the pattern of tight supply of lithium resources in the first half of the year.

Summarize

As can be seen from the above, Tianqi Lithium shook A-shares with a semi-annual pre-increase of 32 to 49 times. The numbers are sexy enough, but the reality that the stock price fell by more than 35% during the year and fell at a higher level indicates another layer of cold logic in the capital market: this report card is the result of the resonance of the triple factors of low base, high concentration, and SQM investment returns. It was a one-time outbreak rather than a return to the trend.

At the industry level, lithium prices soared and fell, and long-term supply volume expectations replaced the current boom and became the main pricing line. Even though the company has two of the world's top resources, Greenbush and Atacama, production capacity is in the release cycle, and valuations have been reduced to a low level of nearly ten years, and the market still chose to vote with its feet — cyclical stocks are not afraid of poor performance; they are afraid of when performance is at their best, and supply and demand expectations have reversed.

However, when Tianqi Lithium's “peak performance” and “stock price bottom” converge depends on when the market believes that this round of profit improvement is not a great song at the end of the cycle, but a new round of reshaping the center of the economy. After all, stock prices never price past glory, but vote for future marginal changes.