Citi sees headwinds for Australia's Liontown Resources on revised outlook

Citi Trends

11/11/2024 21:52

** Citi flags caution on Liontown Resources  LTR.AX , driven
by updated FY28-30 plans & increased capex, with costs for FY26
to be higher than 2H25
    ** Brokerage says lithium producer's higher-than-expected
A$50 mln ($32.86 mln) capex in 2H pulls forward balance sheet
concerns
    ** Says LTR needs extra liquidity by FY26 due to current
pricing, despite an option to draw an additional A$100 mln
($65.72 mln) convertible terms under its partnership with LG
Energy Solution (LGES)  373220.KS 
    ** Co secured $250 mln convertible note from LGES in July,
extending their lithium supply deal by 10 years & offering extra
funding
    ** Recommends "sell" rating at PT A$0.75 per share, despite
outperforming its peers by 10%-20% QTD due to valuation concerns
    ** 2 of 13 analysts rate the stock "buy", 6 "hold" and 5
"sell"; their median PT is A$0.80 — LSEG compiled data
    ** Shares down ~49% YTD as of the last close

($1 = 1.5216 Australian dollars)

 (Reporting by Kumar Tanishk in Bengaluru)
 ((Tanishk.Kumar@thomsonreuters.com))