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Banter and General Comments, page-112

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    Hi @Thesi,

    Welcome back.
    Can I humbly suggest that an improvement on your new avatar could perhaps be the Yin Yang symbol?
    You have always really helped to balance things out around here by diplomatically dealing with negativity
    and perhaps it will help remind you to remain calm and swim between HC’s flags even when tensions and conflict gets the better of you.
    I’m glad you’re back because you keep reminding me to try to at least contribute to this forum from time time in some small way.

    I’ve been on a road trip catching up with an old mate again this week
    and since I couldn’t work up any enthusiasm to get excited by the media frenzy about this US stock correction
    I simply put in an order and got on with more useful things than ticker watching.
    Apologies for being flip about it's seriousness, but I’d like to note that as per a post of mine a couple of months ago,
    my new financial big picture crystal ball man of choice is - drumroll - Gene Simmons of Kiss.
    (recent picture as he has now gone bald)
    He has attained the status of Dow-Whisperer in my eyes.
    Keep Your W. Buffett. Gene is now The Guru.
    He predicted the massive rise in the DOW (yeah ok - I hear you say - so what?) then that there would be a 1100 point correction (I think it was 1300 last week?) and then the DOW would then turn and smash 30k (we’ll see).

    Its not like Old Mr Bat Tongue is completely delirious and coke-addled. Just prior to last week's Dow crash I read  a lot of reports on CNN about the healthy state of US business and that this reporting season coming up in a couple of weeks was looking chokkas with companies set to report broad 15-20% profit increases and calls that the S&P would react with a 17-20% gain.
    Given the apparent healthy state of the US jobs market and business profitability, it seems to me that  last week’s headlines of the lure of 3% US bank interest and the always-hard-to-put-your-finger-on good/bad impact of the ongoing Trade War - then it does seem that the fatter kid on the see-saw will be the one buying stocks now - not going to the bank to give them the money to do so instead.
    (disclaimer:
    Please remember that Gene Simmons is my financial guru, not yours.
    Find your own guru. FYOG )

    Quickly on the Dow. I do keep an eye on it, but it really is a very bizarre index, an anachronistic relic that doesn't make a lot of sense as it ignores market cap and relates to ticker price only, which is a complete mistake that every newb on HotCopper learns pretty quick.
    I guess it gives a very rough and fast idea of what is going on - and last week you didn’t need to know with any level of precision…
    Friday Greed killed Fear with a massive turn around and with their futures looking very green it looks US Monday will be another big green day.
    I’d expect the markets to do more bargain shopping on ASX next week too. Red October has already done its damage.


    I'm excited about what the earnings call may be about.
    Also trying to think of what I consider the most important question to ask. Its quite possible that there will something entirely new to ask a question about..?

    Anyway - from topics that are impossible to get your head around, like how the US markets are travelling
    to the small things changing around the world that aren’t even in the news at all.
    The mate I was catching up with knew I’d be interested in all things lithium, so he showed me a recent picture he took in Penang.
    These E-scooters are everywhere, silent and absolutely fly.
    He said he tried to find out what brand they were but they aren’t even marked, which I find fairly interesting in this heavily competitive day and age. (knockoff OEM that is left clean skin for the Asian market?)

    Image-29.jpg

    Asia slowly filling up with millions of these could potentially weigh very heavily against lithium supply - don’t ya reckon?
    Perhaps a bit “So What” to us because we’re all fixated with Tesla's performance, but it makes so much sense that Asia has a decent personal transport alternative to potentially going broke subsidising petrol as it starts heading towards $2.
    Also reminds me that one of the investors in LAC’s Cauchari project is a Thai petrol company. That is called foresight and a small company beating the giant miners and banks to the punch.

    As far as not quite keeping up with the front-runners, I just read an article with BMW and the head honcho where he said that EVs would never reach parity with ICE.
    (uh huh. Just don’t ask him how expensive the ICE engines are)
    After discussing what a surge in EV production would do to commodity prices (seemed very worried about his cobalt) he finished the interview by describing parity pricing as a “nightmare”. Perhaps it was a bad translation - but I find it interesting that after initially discounting the possibility, that he is admitting to the cold sweats about his supply chain and the inevitable price pressure.

    The Dark Lord of Lithium Nightmares for 2018 Award definitely has to go to Darth Morgan Stanley.
    Him, and his JV partner - Fear Itself.
    An evil chapter they have written, smashing junior lithium companies that are arguably the sectors that has the most potential to put the brakes on global pollution as we try desperately try not to slide into the 2C degree warming zone. Maybe too late already.
    The scientists leaving Inchon’s climate meeting were in tears over the devastation that 1.5C was going to have.
    2C warming is another dimension of pain for the world - poverty, starvation, fires.
    Europe’s governments are thankfully not dropping the ball and their ratcheting up of climate controls is going to a last ditch push back from the fossil fuel and car companies who want more time to solve their supply chain problems.
    Time that the world doesn't have.
    That can only mean the European govts they are doing the right thing. Climate change can't be solved painlessly at leisure, and the auto companies can't be so blind to how big this could be for their bottom line if they can produce the best and/or cheapest EVs.

    I think BMW and VW are basically saying that they can see the entirely new entrants into the Top 15 Auto companies - and its not going to be Tesla - it will be a dozen Chinese car brands that nobody has even heard of yet.
    1 in 6 Germans are involved in the auto industry and they can not afford for that to fail.
    Urban China has smog instead of breathable air and there is no turning back for them.
    The Chinese government probably look at that German auto industry as something that they will soon tackle head on with a massive head start on battery production and the simpler engineering required.
    If you look at the output of vehicles from the top 15 auto companies, the Germans outproduce the Chinese by 500%.
    US is 600% more. Japan produces the most at about 700% of Chinese production.
    I'll remember to take a look at that list in 10 years.

    As Morgan Stanley and the press are still in denial about what is going on with lithium demand - producing lithium companies (at leas the ones that have been in operation for a while) are rich and cashed up, investing to be around for the long haul, improving their product and efficiency.
    The next generation still have a bit of catching up - and the one after that? - where are who are they?
    Some of the biggest hyped stocks on HC have recently turned in disappointing scoping studies that make them likely to remain undeveloped.
    KDR, Greenbushes expansion are held up in the courts. Tawana going through a merge period (ouch).
    PLS and AJM beginning to commission plants, paying down their debts.
    I wish them all the best. We need them all to be doing much better to keep up. We don't want to starve the revolution just as its getting started.

    So @Thesi - that brings us to talking some more about good neighbour Livent.
    I know you are keen to discuss them. Perhaps your interest has been piqued because Joe Lowry has always had a lot to say about them?
    btw: I’ll watch those videos you posted later tonight.
    I was going to post a few thoughts for you on the Livent spin off before I left on a trip on Monday but ran out of time
    and, really, at the end of the day, I found an article by  Wilsonville Capital (whoever that is) that pretty much said all the same stuff that I wanted to say, except I was feeling a bit less diplomatic about Livent’s IPO.
    To me, its a mess of a thing. A cash grab. A New York mugging. An evil zombie stock creation that really shouldn’t have been released into the wild in this form.
    btw: If you want to read up about it with more detailed numbers -
    https://seekingalpha.com/article/4209792-livent-ipo-undervalued-board-directors-independent

    I wish them well but the value was not there for me, and its not specifically the market cap that worries me, because there is a growth story to sell and I don’t mind over-subscribed IPOs supported by media blitz-  but the fact that Livent isn’t an independent company.
    They have none of their own directors. Puppets and rubber-stamping is not a real company to me.
    The money raised goes back into FMC coffers and they retain 85% control.
    Is that reasonable? This is a stock designed for ETFs to buy to complete their lithium Pokemon collection.
    Livent has huge revenue but don’t book a lot of it in percentage as profit - I think its only 10% of circa $400m USD revenue.
    One of the reasons must be the contracts that they have for hydroxide supply which, because of insufficient brine capacity, forces them to bring in Nemaska carbonate and reprocess it. Weird deal  . Weirdly bad. They seem to have often been guilty of double-reporting production. Not sure what the problem is but Joe has always had lots to say.
    Something isn’t right. They have done next to nothing since I started watching them in 2015.
    Seems to me the problem with FMC was always management and their lack of vision and investment and the IPO doesn’t provide the fresh blood they probably desperately needed.

    As @Subs has pointed out. Livent is as good a market cap comparison as we can find.
    The obvious thing to see is that the next step is Galaxy building the SDV plant and matching them with a hydroxide plant etc.
    The fact is that Galaxy already out-earns Livent and they have a $2.6 billion USD valuation.
    (something like $365m AUD and somewhere round about a $7.50 AUD GXY share valuation).
    I won't mention our current market cap - which correctly belongs in the humour section of this site.
    Sp is a very sore point for us and something that is entirely untenable in the medium term.
    I know that a production pure play lithium company is a rare thing on the US stock market - but still - it makes sense that one company that is building a similar plant, that is out-earning the other, will eventually a similar valuation once the market wakes up.
    That is the law of competition.
    Those who say deny that the market doesn’t price in the future earnings - PLS was 87c in 2016.
    Fairly accurately priced that in, you’d have to say.

    Sorry. I’m getting too carried away with logic.
    Pity the market doesn’t quite work quite like that - but logic and reasoned valuations are really the only tools we have to describe and compare.
    That is how our language is constructed, even if the substance of our lives and markets still operate at a more visceral level.
    Livent may still get around to thanking Galaxy in a more formal way soon with their IPO winnings , but at the very least, the giant POSCO deal has massively helped underwrite their own valuation in a much more emphatic way and brought another big hitter to the area to share a few beers with at the Salta's Condor Nest Bar & Grill, which I hope now has a bigger contingent of guys with Galaxy hard hats on relaxing after a hard day's work.

    Which reminds me. Gotta fly.

    have a good one
    AC
 
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