A single-quarter profit surge of 2 billion RMB! Behind Tianqi Lithium’s projected 18-fold net profit increase

Q1 2026 Net Profit Attributable to Shareholders: RMB 1.7–2.0 billion — up 1,530%–1,818% year-on-year Non-recurring Net Profit: RMB 1.6–1.96 billion — up 3,501%–4,312% year-on-year Q4 2025 Net Profit (quarter-on-quarter): RMB 283 million — up 501%–607% quarter-on-quarter ◜ What happened? On the evening of April 20, 'Lithium King' Tianqi Lithium (002466.SZ) dropped a deep-water bomb: Q1 net profit of RMB 1.7–2.0 billion — a staggering 1,530%–1,818% YoY increase! What does this mean? Last year’s full-year profit was only RMB 463 million; now, one quarter alone is over four times that amount. Following the announcement, the stock surged nearly 9% on April 21, and lithium-mining概念股 rallied across the board. ◜ Who’s footing the bill for this earnings explosion? Reason 1: Lithium prices rebounded — products sold at higher prices Strong sales of new-energy vehicles boosted downstream demand, pushing lithium product prices significantly higher than last year. This is the core engine behind the earnings surge. Reason 2: Surging dividends from associate company SQM Tianqi holds ~22% of SQM. With SQM’s explosive earnings growth, Tianqi’s dividend income doubled accordingly. SQM is one of the world’s largest lithium producers, anchored by Chile’s Atacama Salt Flat. Reason 3: New mine nearing commissioning The Greenbushes spodumene mine CGP3 project in Australia began feedstock trial operation in December 2025 and produced its first batch of lithium concentrate in January 2026. As new capacity comes online, costs will continue falling. ◜ How do institutions view it? UBS initiated coverage with a 'Buy' rating and set a target price of RMB 78.3 (vs. closing price of ~RMB 66.82 on April 21). UBS estimates: ~RMB 600 million from SQM + ~RMB 720 million from spodumene concentrate + ~RMB 350 million from inventory gains. Market consensus expected Q1 net profit of ~RMB 1.2 billion; actuals start at RMB 1.7 billion and reach up to RMB 2.0 billion — substantially exceeding expectations.

How do institutions value stocks? A stock valuation method retail investors can learn too

For such companies, the P/E ratio is largely ineffective — because P/E valuation forecasts future performance, and when an industry or company faces difficulty achieving earnings growth, talking about the future is merely empty rhetoric. III. How do institutions value individual stocks? The above discussion of valuation frameworks is quite general. The stock market is highly dynamic, with each stock presenting unique characteristics; even within the same sector, valuations among individual stocks may differ significantly. Therefore, we must also study how institutions value specific stocks — to serve as our reference. In the context of this article, that means understanding the P/E multiple institutions assign to a given stock. Some institutional research reports explicitly state both the 【target price】 and 【earnings per share (EPS)】. As shown in the figure above, Nomura Oriental International revised its EPS forecast for a leading optical module company upward — from RMB 29.19 to RMB 30.29 for 2026 — and raised its target price from RMB 1,015 to RMB 1,325. Using the formula Stock Price = EPS × P/E, we calculate its latest P/E at approximately 43.74x, versus roughly 35x previously. This sharp P/E upgrade stems from a substantial upward revision to the 2027 earnings forecast — reflecting heightened optimism about future growth, thus justifying a premium valuation for high-growth prospects. The P/E shown above represents the genuine P/E used by institutions in their forecasts. By consulting multiple institutions’ reports and considering sector-wide benchmarks, we can derive a reasonable estimate of the 【institutional fair P/E】. However, target price information is often missing from many brokerage platforms, and many research reports omit target prices altogether — making it challenging to obtain a reliable, reference-worthy P/E valuation. That said, this challenge can be overcome. Anwan recommends using the 【Wind Financial Terminal】 analytical software: under the stock’s page → Research Reports → Earnings Forecasts → Forecast Details, users can access key analytical data from various institutions — including target price figures. Naturally, as illustrated above, reports containing target prices remain relatively rare. Thus, we more commonly need to integrate sector P/E benchmarks with institutional forecasts to comprehensively assess and calculate target prices. So how do we calculate them? The simplest method is: 【average EPS forecast by institutions】 × 【institutionally justified P/E】. IV. Practical Opportunities During the Semi-Annual Earnings Season We are currently in the semi-annual earnings season, with companies releasing financial results in rapid succession — many reporting either significant earnings beats or misses. Using the methods outlined above, we can gauge institutional expectations for these companies’ earnings — and try applying this analytical framework to forecast stock price movements. A simple analytical approach: based on the degree of beat in the latest report, apply weighted calculations to estimate the full-year earnings beat, yielding an 【upwardly revised net profit forecast】; dividing this by total shares outstanding yields an 【upwardly revised average EPS】. Of course, this analysis method is admittedly simplistic — because institutions typically revise their comprehensive analyses (not just earnings) when earnings beat expectations. Still, as a basic introduction to fundamental analysis, such rough calculations can be useful. Additionally, Anwan has compiled institutional earnings forecasts for popular sectors — readers interested may refer to my earlier articles. Finally, while this article mentions institutional research reports and forecasts, readers need not obsess over the numbers themselves. Far more important is examining *why* forecasts were upgraded — whether the reasoning forms a logically coherent chain, and whether any potential factors were overlooked. These considerations lie at the very heart of fundamental analysis — not mere arithmetic.