Investment summary

• Industry Magnate in Lithium Resources and Lithium Salt Production with Pricing Power
• Downstream Demand Continues Increasing and Price Keeps Improving
• Result Jumped Fivefold in 2016 and Maintained upward in the First Three Quarters of 2017 with the Growth of 30%
• Capacity Expands Again and Results are Expected to Skyrocket

Valuation and Investment thesis

Tianqi Lithium not only holds shares of companies with the world’s largest scale and best lithium ore resources in production, but also has the world’s largest processing capacity on extracting lithium from ores. The advantages of unique resource conditions and pricing power make Tianqi Lithium the best investment object in upstream sectors of domestic new energy vehicle industry chains. We expected diluted EPS of the Company to RMB 2.19 and 2.69 of 2017/2018. And we accordingly gave the target price to 80.56, respectively 30x P/E for 2018. “Buy” rating.