Lithium Related Companies: The Next Big Thing?October 2, 2017
Demand for Lithium surged in tandem with electric car productions. According to the International Energy Agency, the number of electric cars globally is predicted to soar from 2 million in 2016 to 70 million by 2025.
Being one of the top Lithium producing nations, Chile has seen export volume increased exponentially in recent years to meet worldwide demand for this natural resource.
Price of Lithium carbonate, which is a compound used in Lithium batteries, has soared from US$6,000 per tonne in mid-2015 to over US$10,000 currently as demand outstripped supply. Analysts are expecting price to stabilise at around US$10,000/t in the long run as Lithium Producers ramp up supplies.
With such positive dynamics, investors looking for growth can consider investing in one of the stakeholders in the Lithium supply chain. Below is a non-exhaustive list of Lithium supply chain stakeholders which are mainly listed on the Tokyo, New York and Korea stock exchanges.
|Company||Supply chain||Company Profile||Listing|
|Sociedad Quimica SA||Raw materials||Largest Lithium Producer located in Chile. Also produce plant nutrients.||NYSE|
|Albemarie Corp SA||Raw materials||Vertically integrated Manufacturer for Lithium products. Specialty chemical producer.||NYSE|
|GS Yuasa||Battery Packs||Established Japan automotive battery maker||TSE|
|SAMSUNG SDI CO LTD||Battery Packs||Small sized and automotive battery maker. Energy storage system solution provider||KRX|
|BYD CO LTD-H||Battery Packs||China automotive battery and electric car maker||HKEX|
Source: Portfolio Wealth Global
An inexpensive way to get a diverse exposure into this industry will be via Global X Lithium ETF (Stock quote: LIT). Top holdings include household names like Tesla Motors and Panasonic Corp. At a price to earnings ratio of 35, this ETF is suitable for investors who strongly believe that the stakeholders can benefit from the rising global consumption trend for Lithium-related products.
POEMS 2.0 clients are able to access all stocks and ETFs mentioned in the article. As ETF is classified as Specific Investment products by the Monetary Authority of Singapore, clients will need to pass an online Customer Assessment Review (CAR) assessment before placing trade orders for most ETFs. To participate in the US market, clients will be required to submit a W8-BEN form for US withholding tax purpose. Do approach your Trading Representatives or any Phillip Investor Centre for further clarifications.
About the author
Chiang Jin Liang
Jin Liang is currently providing dealing services to over 8000 trading accounts and is part of the POEMS Dealing, the core in-house dealing department of Phillip Securities Pte Ltd.
Jin Liang believes in applying both fundamental and technical analysis in equities investing. He likes companies that can grow their earnings, stay relevant in an ever-changing landscape and focus on investor relations. Jin Liang frequently conducts educational seminars with the objective of imparting financial knowledge to the general public.
Jin Liang holds a Bachelor Degree in Electrical Engineering from Nanyang Technological University (NTU) and passed Level II of the Chartered financial Analyst (CFA) exam.