2025-05-28-Jefferies-Sociedad_Química_y_Minera_de_Chile_S.A.（智利化学矿业公司）（SQM）_一季度表现亮眼_未来需谨慎应对_12页_549kb

SQM Summary: Latin America | Chemicals

Core Content

Sociedad Quimica y Minera de Chile (SQM) is a leading Latin American chemical and mining company, primarily focused on specialty fertilizers, iodine, and lithium. The company's 1Q25 results showed a solid performance, with adjusted EBITDA of US $360m, up 10% from the previous quarter and 6% above FactSet consensus. This was largely driven by strong performance in the iodine division, which contributed to ~46% of total EBITDA and saw a 25% increase in gross profit.

Despite a challenging lithium environment marked by falling international lithium prices, SQM remains committed to its growth strategy. The company expects global lithium demand to grow by ~17% in 2025 and continues to leverage its low-cost production capabilities, with cash costs equating to just over US $6/kg in 1Q25. However, this may put pressure on the company's balance sheet in the short term due to the volatile lithium pricing and oversupply.

Main Points

• 1Q25 Performance:

  • Adjusted EBITDA: US $360m (+10% QoQ, +6% above FactSet consensus)
  • Lithium sales volume increased 26% YoY
  • Realized lithium price dropped 27% YoY to US $9.1k/ton
  • Net debt (ND) reduced by ~US $300m QoQ
  • Gearing at 2.1x ND/EBITDA LTM

• Codelco Agreement:

  • The process to extend the Atacama lithium concession with Codelco continues as expected
  • Agreement is aimed to close in 2H25, despite local political noise from Chile's upcoming elections

• Valuation and Price Target:

  • SQM trades at 8.7x EV/EBITDA 2025E, a ~20% discount to peer Albemarle (ALB)
  • We lower our 2025-26E EBITDA estimates by ~6%
  • Our price target is US $51, with a 61% upside from the current price of US $31.70

• Investment Thesis:

  • SQM's low-cost production gives it a strategic edge in the lithium market
  • The Codelco agreement offers long-term visibility and potential for expansion
  • SQM's international expansion in Australia and China presents medium-term growth opportunities
  • The iodine and potassium nitrates divisions provide earnings and cash flow stability

Key Scenarios

• Base Case (US $51):

  • Lithium volumes grow ahead of the market through 2030
  • Lithium prices gradually recover as demand growth becomes clearer
  • Iodine supply/demand remains tight
  • SQM's low-cost advantage persists

• Upside Scenario (US $74):

  • Lithium spot prices increase to at least US $15,000/t
  • EV penetration accelerates
  • SQM extends the Atacama concession

• Downside Scenario (US $20.4):

  • Political issues in Latin America reduce mining activity
  • Codelco agreement collapses or is delayed
  • Lithium prices remain subdued due to oversupply and slowing EV adoption

Financial Highlights

Risks

• Lithium Market Risks:

  • Price volatility and oversupply
  • Uncertainty around the length of lithium contracts
  • Potential for the Codelco agreement to collapse

• Environmental and Operational Risks:

  • Water and wastewater management
  • Climate risk affecting operations in the Salar
  • Sustainability targets (e.g., reducing brine extraction and water consumption)

• Company-Specific Risks:

  • Regulatory shifts
  • Competitive dynamics
  • Impact of climate stress on agricultural nutrition platforms

Sustainability Targets

• Reduce brine extraction by 50% by 2030
• Reduce continental water consumption by 40% by 2030 and 65% by 2040
• Achieve carbon neutrality in all products by 2040, and for lithium, potassium chloride, and iodine by 2030

Catalysts

• Completion of the Codelco agreement
• Expansion of lithium production in Chile and China
• Progress on the Andover lithium exploration project in Australia
• Launch of the Salar Futuro project in Chile before 2030
• Recovery in lithium prices and increase in EV penetration
• Higher-cost lithium suppliers curtail production

Valuation Methodology

• Price target based on 7.4x 2027E EBITDA multiple
• Consideration of peer valuations, operating leverage, and market conditions
• EBITDA, EPS, and cash flow-based analyses are used in conjunction with other valuation models

Analysts

• Alejandro Anibal Demichelis – Equity Analyst, +34 919498377, ademichelis@jefferies.com
• Pedro Baptista – Equity Analyst, +44 (0) 207 029 8351, pbaptista@jefferies.com
• Francisco Barbosa – Equity Associate, +1 (212) 284-2197, fbarbosa@jefferies.com

Investment Rating

• Rating: Buy
• Price Target: US $51
• Upside: +61% from current price
• Downside: -36% (US $20.4)

Other Disclosures

• Jefferies may have conflicts of interest due to business relationships with companies covered in the report
• Reports are not intended as investment recommendations and should be considered alongside other factors
• Analysts are not registered with FINRA in non-US jurisdictions, and may not be subject to certain restrictions