SQM - SQM Has Cash In Hand A New Project In Australia And Is Undervalued
- SQM produces lithium derivatives, specialty plants nutrition, and many other industrial chemicals.
- SQM signed an agreement to start production also in Australia. With the new project, most investors would be expecting more production and more revenue growth in the coming years.
- I chose the EV/EBITDA exit multiple. Peers are trading at 6x-24x EBITDA. Taking the valuation of peers into account, my exit multiple of 9x-13x EBITDA is quite conservative.
- With an asset/liability ratio close to 2x, $1.8 billion in cash, and $754 million in other financial assets, SQM has a significant amount of resources.
- I assumed cash of $2.61 billion and debt of $2.69 billion. With an exit multiple of 9x, the implied share price stands at $77.
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SQM Has Cash In Hand, A New Project In Australia, And Is Undervalued