Tianqi Lithium ends flat in biggest Hong Kong debut of 2022

Zhangjiagang production plant. (Image courtesy of Tianqi Lithium.)

Tianqi Lithium Corp. ended flat in its debut in Hong Kong, following the largest share sale in the Asian financial hub this year.

The shares trimmed a decline of as much as 11% to finish at HK$82, the same price they were sold in an offering that raised about HK$13.5 billion ($1.7 billion). They did not trade above the listing price at any point during the session. The supplier of the key material used in batteries is also listed in Shenzhen.

The performance suggests investors remain wary of putting money into newly listed stocks in Hong Kong. Three other companies that debuted in the city on Wednesday finished lower. The weak starts cast a shadow over a pipeline of large offerings in the city, including that of China Tourism Group Duty Free Corp., the world’s largest travel retailer that is planning a share sale of as much as $3 billion.

Tianqi’s Hong Kong listing, nevertheless, caps a major turnaround for the firm after a debt crisis just two years ago forced it to sell stakes in prize assets, and raised questions for management. The company’s revival was aided by an eye-popping gain of more than 1,000% for lithium prices since mid-2020.

Tianqi mines lithium in Australia and produces compounds and derivatives in China. The Chinese producer first brought up a secondary listing in 2018, but shelved the plan amid falling lithium prices and liquidity problems. In 2020, the Chinese company sold a stake in Australia’s Greenbushes, one of the world’s most coveted lithium mines, to Perth-based IGO Ltd. for $1.4 billion to help repay debt.

A fresh global push for electrified transport is fueling a demand boom for lithium — a key material used in EV batteries. According to BloombergNEF, lithium prices could stay elevated amid a tight market this year.

Tianqi is planning to more than double its lithium refining capacity in the next three years to about 110,000 tons, from about 45,000 tons now, Chief Executive Officer Frank Ha said in an interview with Bloomberg Television on Wednesday. “The continued ramp-up of revenues and prices is something that we can foresee,” Ha said.

Tianqi’s Hong Kong share sale has attracted seven cornerstone investors including LG Chem Ltd. and battery maker CALB Co., the prospectus shows. In another sign of a brighter outlook for Tianqi, its lithium refinery in Australia’s Kwinana — a venture between the company and IGO — delivered its first batch of battery-grade lithium hydroxide in May.

Most companies that debuted in Hong Kong this year fell on their first day of trade, data compiled by Bloomberg show. Retailer Miniso Group Holding, wealth management company Noah Holdings Ltd. and piped natural gas distributor Huzhou Gas Co. fell 3%, 4.5% and 7.9%, respectively, on their first day of trade on Wednesday.

Big offerings have dwindled this year amid rising inflation, hawkish central banks and a jump in volatility that has led the Hang Seng Index to retreat more than 11% this year.

Strong appetite for listings in the city has yet to return, according to Ke Yan, head of research at DZT Research. “Everyone is still working hard to find a deal to profit from,” he said.

Tianqi’s shares plunged in Shenzhen on Monday after the wife of one prominent investor raised concerns about the firm’s valuation ahead of the secondary listing. The shares on the mainland touched an all-time high last week.

Morgan Stanley, China International Capital Corp. and CMB International Capital Ltd. are joint sponsors of the Hong Kong offering.

(By Filipe Pacheco and Annie Lee, with assistance from Pei Li and David Ingles)

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