Albemarle Corporation

• • Roskill and Benchmark predict lithium supply and demand are rising and may be constrained by the end of the decade.
  • Lithium market estimated to expand 20% through 2028.

  Li’s only mine in North America

  • Albemarle mines Li in America, produce 1% of global capacity, 20% less than Tesla annually. In five years, production will double.

  Recent alterations

  • By 2020, low pricing hurt company operations and growth. After a 2021 market turnaround and price increase, the company is expanding.
  • Chilean officials approved a $1b investment to expand its Chilean factory from 60-80 thousand to 140,000 tons over the next five years.
  • In October, the company began manufacturing in La Negra; it’s awaiting commercial qualification.

  Better valuation?

  • 2022 EPS was $6.15, up from $1.06. This high EPS means $4.35B in growth, decreasing PS to 5.12.
  • The stock is appropriately valued with 20% growth in the first 10 years, 10% in the rest, a 7% WACC, and a 2% terminal rate.

  Conclusion

  • Considering Li’s market trend, I think the stock price is fair. Albemarle will thrive as the initial comers and leading titans despite new competition.