News and numbers are working in favour of ASX lithium stocks with lithium mining companies such as Orocobre Limited (ASX:ORE), Pilbara Minerals Limited (ASX:PLS) making their way to top gainers for the day, and others such as Galaxy Resources Limited (ASX: GXY) showing substantial intraday gains.
While the previous developments in the automotive industry have already swept up the lithium mining stocks in 2020, the recent developments across the EV segment front are further polishing the lithium outlook, which is already expected by several industry experts to take a turnaround in 2020.
To Know More, Do Read: ASX Lithium Stocks Blazing High; Stable Subsidy, Cost-Cutting, Tesla Push- Positive Tailwind
U.K. Bans Petrol and Diesel Engines and Shifts Goal Post?
At the sidelines of the COP26 climate summit, the Prime Minster- Boris Johnson announced the revised the plan to ban the sale of all petrol and diesel engines, including hybrids and plug-in hybrids. The initial target, which was aimed at banning all petrol and diesel cars by 2040, was fast-tracked by the United Kingdom to 2035, in order to measure the goal of achieving the net-zero emission by 2050.
However, the Society of Motor Manufacturers and Traders (or SMMT) labelled the decision as “extremely concerning” and expressed unhappiness with SMMT boss-Mike Hawes citing that the government has just shifted the goal post without a clear plan in place.
Mike Hawes also expressed concern in terms of fraction and mentioned that the demand for still expensive technology accounts for just a fraction of sales. However, the government further confirmed the plans and quoted that it would work in collaboration with all sectors of the industry to fasten the rollout of zero-emission vehicles, which currently only battery and hydrogen engines provide.
Kia Motors Plans
During mid-January 2020, Kia motors announced its mid- to long-term strategy “Plan S” which aimed at transitioning to electric vehicle mobility by 2025 with an investment of USD 25 billion. Kia also outlined in its plan to sell ~ 500,000 all-electric cars by 2026.
The company planned to realise 11 EV models by 2025, including plug-ins BEVs and PHEVs, and sell 500,000 BEVs by 2026.
The roadmap for EV sales also suggested that ~25 per cent of the overall vehicles sale by the Company would be from EVs, PHEVs, FCVs by 2025; and,
- Kia also mentioned in its plan that the company would launch a first dedicated all-electrical model by 2021, which would be built on a unique platform to specifically accommodate the car’s world-leading EV powertrain and technologies.
Numbers in Support
Tesla, the giant EV maker, recently announced the Q4 FY19 numbers. The EV pioneer saw its market cap zoom up 5-fold in just few months, brining attention to EV ecosystem, which is a boost for the lithium mining companies across the globe. Tesla is already leading the global front with its high EV penetration, and the recent onset of its Shanghai-based Gigafactory is already a “poster boy” for many media houses. The model X, model S, model 3 are running successful and marking higher global sales.
- Tesla Q4 Update
Tesla production for Model S/X surged by 10 per cent on a quarterly basis to stand at 17,933 units, however, fell by 28.72 per cent up against the previous corresponding period.
The production of Model 3 was up by 9 per cent on a quarterly basis to stand at 86,958 units, which also marked an increase of 41.63 per cent against the previous corresponding period.
The deliveries for Model S/X surged by 11 per on a quarterly basis but fell by 29 per cent against the previous corresponding quarter, while deliveries for Model 3 soared by 16 per cent to stand at 92,620 units on a quarterly basis; Model 3 deliveries also surged by 46 per cent against the previous corresponding quarter.
One interesting ratio-days of sales, which marks the operational efficiency improved substantially with days of sales, which marks the number of days taken by a company to sell its inventory declined.
Days of sales for Q4 stood at 11, which marked a quarterly decline of 35 per cent and a decline of 42 against the previous corresponding quarter DOS of 19. The days of sales should be further investigated with the growth in revenue and accounts receivable to capture the right picture and reason for fast sales on the statement of operations.
- Growth in Revenue and Accounts Receivable
Tesla Q4 total revenue soared by ~ 17.15 per cent on a quarterly basis to stand at USD 7,384 million, which also marked an increase of ~ 2.18 per cent against the previous corresponding period. On a yearly basis, the revenue for 2019 stood at USD 19,952 million, up by 13.15 per cent as compared to the revenue in 2018.
Lithium Players Shining on ASX
- Orocobre Limited (ASX:ORE)
The positive news and numbers along with improvement at the company level payed-off for Orocobre and the stock of the company surged from $2.21 (low on October 2019) to the present high of $3.96 (intraday high on 14 January 2020), which underpinned a price appreciation of 79.18 per cent. On a daily time frame, the stock is in momentum and surged from $2.97 (intraday low on 3 February 2019) to the present level of $3.64 (as on 5 February 2020), a gain of ~ 22.55 per cent.
To Know More, Do Read: Orocobre Managing Industry Challenges; Actions and Developments in Q2 FY20
- Galaxy Resources Limited (ASX: GXY)
Galaxy has been recently breaking headlines of many media houses for adopting various cost-cutting measures and prioritising value over volume at its flagship spodumene prospect- Mount Cattlin. Apart from that, the company is also catching the attention of lithium enthusiasts over the development of its lithium downstream processing plant- Sal de Vida, which is among the top priority of the company.
So far, Galaxy has developed an in-house flow sheet for the project and is ready for producing primary lithium carbonate, targeting the lithium purifiers as the primary customers.
To Know More, Do Read: Galaxy- Future Ready with Low-Cost, Value Production, and Lithium Downstream?
The stock of the Company recently gained momentum on the exchange with the price rising from $0.840 (low on December 2019) to the present high of $1.320 in January 2020, which marked a price gain of 57.14 per cent. On a daily basis, the stock rose from $0.965 (intraday low on 3 February 2020) to the present high of $1.230 (as on 5 February 2020), which underpinned a gain of ~ 27.46 per cent.
During the day’s session today, the stock witnessed a massive gap up opening and demonstrated an upside intraday move of ~ 8.85 per cent.
- Pilbara Minerals Limited (ASX: PLS)
While lithium mining companies are on an up move, the peer-Pilbara is not lagging behind, the Company is managing the production in line with the demand from its offtake partners in China and surging on ASX. The stock of the Company rose from $0.250 (low in December 2019) to the present high of $0.410 (high in January 2020), a price increase of 64 per cent. On a daily basis, the stock surged from $0.275 (intraday low on 3 February 2020) to the present high of $0.355 (as on 5 February 2020), an increase of 29 per cent.