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Sociedad Quimica Y Minera De Chile SA ADR SQM

Morningstar Rating
$48.13 −3.30 (6.42%)
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Company Report

SQM Earnings: Supply Discipline Will Support Lithium Price Recovery

Our key takeaway from SQM's fourth-quarter earnings results and subsequent conference call was management's discipline to act as a rational player in lithium by reducing volume growth in response to lower prices. SQM plans to slow its sales volume growth in 2024 to a midpoint of 7.5%, which is below our outlook for the pace of lithium demand growth. The company also does not plan to sell spodumene into the market at its Mt. Holland project, which just began production last year. As a result, we think SQM's supply discipline will help the lithium market move back into a supply deficit by the end of the year. Having updated our model to incorporate fourth-quarter results, we maintain our $95 per share fair value estimate. Our narrow moat rating is also unchanged.

Price vs Fair Value

SQM is trading at a 49% discount.
Price
$48.13
Fair Value
$42.00
Uncertainty
Very High
1-Star Price
$257.82
5-Star Price
$82.70
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

SQM's crown jewel is its Salar de Atacama operation in Chile, which is the lowest-cost lithium deposit globally. Its capacity expansions at this resource should create long-term value.

Bears

Lithium prices will fall as new supply comes online faster than demand, which will weigh on profitability. SQM's plans to develop a new lithium resource will prove value-destructive in the wake of lower prices.

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News

Trading Information

Previous Close Price
$51.43
Day Range
$47.8550.61
52-Week Range
$38.5089.59
Bid/Ask
$47.24 / $48.40
Market Cap
$13.75 Bil
Volume/Avg
1.9 Mil / 1.8 Mil

Key Statistics

Price/Earnings (Normalized)
6.88
Price/Sales
1.84
Dividend Yield (Trailing)
10.44%
Dividend Yield (Forward)
10.44%
Total Yield
10.44%

Company Profile

Sociedad Quimica y Minera de Chile is a Chilean commodities producer with significant operations in lithium (primarily used in batteries for electric vehicles and energy storage systems), specialty and standard potassium fertilizers, iodine (primarily used in X-ray contrast media), and solar salts. The company extracts these materials through its high-quality salt brine deposits and caliche ore. SQM is also developing a hard rock lithium project in Australia and is growing its lithium refining assets in China.
Sector
Basic Materials
Industry
Specialty Chemicals
Stock Style Box
Large Value
Total Number of Employees
7,521

Competitors

Valuation

Metric
SQM
LAAC
ALTM
Price/Earnings (Normalized)
6.886.76
Price/Book Value
2.490.621.36
Price/Sales
1.843.00
Price/Cash Flow
6.42
Price/Earnings
SQM
LAAC
ALTM

Financial Strength

Metric
SQM
LAAC
ALTM
Quick Ratio
1.683.091.90
Current Ratio
2.5012.433.46
Interest Coverage
22.44−1.85
Quick Ratio
SQM
LAAC
ALTM

Profitability

Metric
SQM
LAAC
ALTM
Return on Assets (Normalized)
18.60%−5.06%18.77%
Return on Equity (Normalized)
39.48%−6.30%26.41%
Return on Invested Capital (Normalized)
23.58%−7.47%22.73%
Return on Assets
SQM
LAAC
ALTM
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