TD Cowen flags rising lithium inventory, cuts PTs

Lithium Royalty

11/07/2024 15:14

** Brokerage TD Cowen says "continue to observe concerning
inventory builds and incremental supply disrupting balances" in
lithium market
    ** Says Chinese customs data indicates noticeable build of
incremental supply from African countries
    ** "While long-term value remains, the near-term lacks
attraction, particularly given the U.S. election backdrop" as
uncertainty surrounding President Joe Biden's IRA looms
    ** "Despite robust Chinese EV sales with penetration rates
nearing 50%, U.S./EU EV adoption has slowed substantially as
sales increased YTD just 9%/7% y-o-y"
    ** However, plug-in hybrid vehicles (PHEVs) have become
increasingly popular YTD in all of the above geographies -
lithium units are lower in PHEVs 
    ** Additionally, rare earths market remains weak with
sluggish Chinese sentiment along with oversupply
    ** Brokerage favors Arcadium Lithium  ALTM.N  for exposure
to lithium market, MP Materials  MP.N  for exposure to rare
earths
    
          Company           New PT  Old PT     Rating
 Albemarle  ALB.N           $115    $130    Hold
 Arcadium Lithium  ALTM.N   $6      $10     Buy
 Lithium Americas           $5      $6      Buy
 (Argentina)  LAAC.TO                       
 Lithium Americas  LAC.N    $5      $10     Buy
 Lithium Royalty  LIRC.TO   C$8.5   C$10    Buy
 Piedmont Lithium  PLL.O    $12     $15     Hold
 
 (Reporting by Seher Dareen in Bengaluru)
 ((Seher.Dareen@thomsonreuters.com;))