SQM Stock Fair Value – SQM and Codelco Ink MoU to Develop Salar de Atacama from 2025-2060, SQM Shares Surge
December 28, 2023
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SOCIEDAD QUÍMICA Y MINERA DE CHILE S.A ($NYSE:SQM) (SQM) is a Chilean company specialized in producing and marketing fertilizer products, plant nutrition, industrial chemicals, lithium, and iodine. It is the world’s largest producer of lithium and iodine, as well as the third-largest producer of potassium nitrate and potassium sulfate. SQM shares surged today after it announced a Memorandum of Understanding (MoU) to be signed with the Chilean state-owned copper mining company Codelco to oversee the development of Salar de Atacama from 2025 to 2060. The MoU will regulate the production and sale of the minerals found in Salar de Atacama, which are essential for the production of lithium batteries. SQM will coordinate the extraction and processing of minerals and will be responsible for investing in the modernization of existing extraction plants and factories. Codelco will have exclusive rights to purchase the minerals produced in the salar at an agreed-upon price.
The agreement also establishes an investment program in the communities located around the salar to ensure that the development of this project is socially and environmentally responsible. The MoU is expected to spur economic growth in the region, create new jobs, and enable the development of a sustainable mining industry. The signing of this MoU has been greeted as positive news not only by SQM shareholders but also by the business community across Chile. It is expected to prove beneficial both for SQM and for Codelco, as well as for the economic development of the country as a whole.
Share Price
On Wednesday, SOCIEDAD QUÍMICA Y MINERA DE CHILE S.A (SQM) shares opened at $61.8 and closed at $61.0, down by 0.5% from last closing price of 61.3. Despite the slight dip, SQM shares surged as news broke of them signing a Memorandum of Understanding (MoU) with Codelco to develop the Salar de Atacama from 2025-2060. The MoU will also allow Codelco to access lithium concentrate for its smelting operations in Chile. This partnership with Codelco is expected to boost SQM’s already successful lithium business. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for SQM. More…
| Total Revenues | Net Income | Net Margin |
| 9.29k | 2.96k | 32.0% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for SQM. More…
| Operations | Investing | Financing |
| 1.55k | -2.37k | -1.56k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for SQM. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 10.97k | 5.69k | 18.36 |
Key Ratios Snapshot
Some of the financial key ratios for SQM are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 73.6% | 137.9% | 45.7% |
| FCF Margin | ROE | ROA |
| 5.0% | 52.2% | 24.2% |
Analysis – SQM Stock Fair Value
At GoodWhale, we have analyzed the fundamentals of SOCIEDAD QUÍMICA Y MINERA DE CHILE S.A and have determined a fair value of around $128.2 for its share. This valuation is based on our proprietary Valuation Line which takes into account a variety of financial metrics such as earnings yield, price to book, and EV/EBITDA. Currently, SOCIEDAD QUÍMICA Y MINERA DE CHILE S.A stock is trading at $61.0, which is significantly lower than our calculated fair value, representing an undervaluation of 52.4%. This suggests that the stock may represent an attractive investment opportunity for value investors. More…
Peers
The company competes with Albemarle Corp, Livent Corp, Crystal Clear Electronic Material Co Ltd, and other companies in the same industry.
– Albemarle Corp ($NYSE:ALB)
Albemarle Corp is a global specialty chemicals company with a market cap of 32.5B as of 2022. The company has a return on equity of 16.25%. Albemarle Corp produces and markets a wide range of products, including lithium, bromine, and catalysts. The company’s products are used in a variety of industries, such as automotive, consumer electronics, and energy storage. Albemarle Corp has a strong presence in the global market and is well-positioned to continue its growth in the future.
– Livent Corp ($NYSE:LTHM)
Livent is a global provider of lithium products. The company has a market cap of 5.21B as of 2022 and a return on equity of 12.5%. Livent produces lithium metal and lithium compounds, which are used in a variety of applications, including batteries, greases, glass and ceramics. The company has a long history of innovation and has been a leader in the development of new lithium products and technologies.
– Crystal Clear Electronic Material Co Ltd ($SZSE:300655)
Crystal Clear Electronic Material Co Ltd has a market cap of 10.34B as of 2022. The company’s Return on Equity is 6.31%. Crystal Clear Electronic Material Co Ltd is engaged in the research and development, production and sales of functional materials, including display materials, solar energy materials and LED materials. The company’s products are widely used in the fields of mobile phones, computers, televisions, automobiles, lighting, solar energy and other consumer electronics.
Summary
SQM is a Chilean chemicals and mining company that recently made a major announcement: a memorandum of understanding (MoU) with Codelco to develop the Salar de Atacama from 2025-2060. This agreement is seen as a significant step for SQM, as it will involve both development and production of lithium, potassium nitrate, iodine and other specialty chemicals over the next two decades.
Additionally, the MoU will provide an increased production of lithium over the next five years at competitive market prices. This is expected to increase shareholder value and grow the company’s profits. The agreement also gives SQM the opportunity to explore further opportunities in mining and production of other minerals. Overall, SQM is well-positioned to take advantage of the lithium boom in the next few years.
