On the evening of October 25, Tianqi Lithium disclosed its Q3 2026 report. In the first three quarters, the company achieved operating revenue of CNY 18.279 billion, a year-on-year increase of 147.11%; net profit attributable to shareholders was CNY 5.602 billion, up 3013.86% YoY; net profit attributable to shareholders after deducting non-recurring items was CNY 5.533 billion, up 7663.29% YoY.
Breaking down the growth rate, two factors support it: gross margin expansion driven by simultaneous increases in lithium product sales prices and volumes, and investment income contributed by associate SQM.
Another clue lies hidden in the balance sheet: the Talison Phase III chemical-grade lithium concentrate project, originally scheduled for completion in Q4 2020, has reached design capacity as of the report disclosure date.
01、Lithium Price and Volume Move Together, Gross Profit Increases Over Threefold
The Q3 report shows that from the beginning of the year to the end of the reporting period, operating costs were CNY 6.581 billion, a YoY increase of 45.80%, significantly slower than the 147.11% growth in operating revenue.
This gap directly translates into substantial gross profit expansion: gross profit for the first three quarters was CNY 11.698 billion, compared to CNY 2.883 billion in the same period last year, a YoY increase of 305.70%. Calculated using the formula "(Operating Revenue - Operating Cost) / Operating Revenue", the gross margin was 64.00%, compared to 38.98% in the same period last year, an increase of 25.02 percentage points.
Regarding changes in volume and price on the revenue side, the company stated in the report: "This is primarily due to the increase in both the average selling price of lithium products and the sales volume of lithium compounds and derivatives from the beginning of the year to the end of the reporting period compared to the same period last year." This means revenue growth stems from the joint push of price and volume, rather than changes in consolidation scope or adjustments from non-recurring items.
The pricing context can be corroborated by third-party data. According to spot quotes from Shanghai Metals Market (SMM), the average spot price of battery-grade lithium carbonate in H1 2026 was CNY 163,800 per tonne, approximately 132.3% higher than CNY 70,500 per tonne in H1 2025.
However, while spot prices rose, futures prices had already pulled back earlier—calculated from the high of CNY 209,800 per tonne in mid-May this year, the maximum drop in lithium carbonate futures prices exceeded 50% over five months, followed by volatile declines in spot prices, which fell below the CNY 100,000 per tonne threshold by late October.
It should be noted that Tianqi Lithium did not disclose production and sales volume data for lithium carbonate in the Q3 report, making it difficult to precisely split revenue increments between "price" and "volume." However, given the 25.02 percentage point rise in gross margin, the transmission of price increases to the income statement appears complete and direct.
For a lithium company with a high resource self-sufficiency rate, rising lithium concentrate prices simultaneously boost the gross margin of self-produced ore and raise the cost base for downstream lithium salt products. The final net effect depends on the ratio of self-mined to externally mined ore, as well as the operational rhythm of various production bases.
02、Quarter-over-Quarter Decline, Price Elasticity Works Both Ways
Single-quarter data provides another observation angle. In Q3, the company achieved operating revenue of CNY 6.037 billion, a YoY increase of 135.40%; net profit attributable to shareholders was CNY 1.360 billion, up 1323.97% YoY; net profit after deducting non-recurring items was CNY 1.334 billion, with non-recurring gains/losses amounting to only CNY 26.0076 million.
Based on these figures, the Q3 net profit margin attributable to shareholders was 22.52%, lower than the 34.65% level in the first half of the year. The drop compared to Q2 is more intuitive. Net profit attributable to shareholders in the first half of this year was CNY 4.242 billion, of which Q2 accounted for CNY 2.366 billion (based on interim and Q1 reports). The Q3 figure of CNY 1.360 billion represents a quarter-over-quarter decline of 42.53%.
Revenue did not decline synchronously—Q3 operating revenue of CNY 6.037 billion was roughly flat against the H1 quarterly average of CNY 6.121 billion, accounting for 33.03% of total revenue for the first three quarters. Changes occurred primarily in profit margins rather than revenue scale. Morgan Stanley offered a similar observation in a research note dated October 22. This note was based on estimates derived from previously issued earnings forecasts, predating the Q3 report disclosure.
The bank estimated "Tianqi Lithium's Q3 net profit ranged between CNY 860 million and CNY 1.76 billion, compared to CNY 2.37 billion in Q2, with a median of CNY 1.3 billion aligning with expectations," attributing the "quarterly slowdown to falling lithium prices, down CNY 23,700 per tonne quarter-over-quarter, noting that lithium prices fell faster than spodumene, potentially impacting processing margins during the downturn." The bank also anticipated "this headwind will persist into Q4, with lithium prices down CNY 19,500 per tonne quarter-to-date."
This reflects the duality of the vertical integration model. During lithium price uptrends, the cost advantage of owned mines amplifies gross margins; however, when downstream lithium salt prices fall faster than upstream lithium concentrate prices, profit margins in the processing segment are compressed first. The Q3 quarter-over-quarter decline is more a reflection of structural price changes on the income statement than a contraction in demand.
03、Investment Income Accounts for 17% of Total Profit, SQM Remains a Key Variable
There is another significant line item on the income statement that cannot be ignored. For the first three quarters, investment income was CNY 2.291 billion, compared to CNY 336 million in the same period last year; specifically, investment income from associates and joint ventures was CNY 2.211 billion, compared to CNY 349 million last year. The latter item was higher than total investment income last year because other investments collectively resulted in losses. Based on total profit of CNY 13.729 billion, investment income accounted for 16.68%. This portion mainly comes from SQM.
The company explained in the report: "Based on Bloomberg forecast data and SQM's disclosed performance for H1 2026, SQM's performance for the first three quarters of 2026 is expected to increase significantly YoY, leading to increased recognition of investment income from this associate from the beginning of the year to the end of the reporting period compared to the same period last year." This item relies on forecast data, and the final outcome still depends on SQM's actually disclosed results, a calculation premise clearly stated by the company in the report.
Another set of numbers reveals the consolidation structure. Net profit for the first three quarters was CNY 10.373 billion, of which minority interest share was CNY 4.771 billion, accounting for 46.00%; net profit attributable to shareholders was CNY 5.602 billion. The core mining platform is not wholly owned, and a considerable portion of Greenbush mine profits belongs to partners, explaining why net profit differs from shareholder-attributable net profit by over 80%.
In terms of profit quality, net profit after deducting non-recurring items was CNY 5.533 billion, accounting for 98.78% of shareholder-attributable net profit, indicating minimal impact from non-recurring items on current period profit.
Total non-recurring gains/losses amounted to CNY 68.3694 million, representing the attributable figure after deducting tax effects of CNY 27.7102 million and minority interest effects of CNY 56.7496 million. Before these deductions, there were five pre-tax items totaling CNY 152.8292 million: gain on disposal of non-current assets from selling SQM Class B shares (CNY 76.3765 million), government subsidies (CNY 57.4685 million), insurance compensation for local fire at Talison Phase III plant (CNY 87.9047 million, listed under other non-operating income/expenses), gains/losses from entrusted investment or asset management (CNY 11.4881 million), and fair value changes/disposal gains/losses on commodity futures and FX hedging (-CNY 80.4087 million). After deducting the tax and minority interest impacts, the result is the aforementioned CNY 68.3694 million.
It is necessary to distinguish that the non-recurring deduction excludes non-recurring items but does not exclude investment income: CNY 2.291 billion in investment income equals about 40% of shareholder-attributable net profit. Therefore, current profit composition includes not only core business operations but also core business gross margin and associate investment income, forming two pillars of performance.
Concurrently, net cash flow from operating activities was CNY 5.645 billion, a YoY increase of 157.40%. The company explained this was mainly due to increased operating revenue and gross profit, along with higher collections compared to the same period last year. Cash flow broadly matches profit scale, indicating this round of profitability is supported by cash.
However, accounts receivable increased from CNY 850 million at the beginning of the year to CNY 3.824 billion, a growth of 349.88%, significantly exceeding revenue growth rates. Collection pace remains a key observation point for subsequent reporting periods.
04、Phase III Reaches Capacity, Resource-Side 'Volume' Materializes
The 'volume' supporting the revenue side comes from capacity release on the resource side. The Q3 report's "Other Important Matters" section disclosed that the Talison Phase III chemical-grade lithium concentrate expansion project was completed on December 18, 2025, and officially started trial production. On January 30, 2026, it produced the first batch of standard-compliant chemical-grade lithium concentrate. The project was approved by the board on July 24, 2018, originally planned for completion and trial production start in Q4 2020; on December 22, 2020, Windfield's board decided to postpone trial operation to 2025.
There was also a disturbance in between. On June 9, 2026, the company received a report from subsidiary Talison regarding a local fire during maintenance at the Phase III plant, damaging some equipment while main equipment and lines remained unaffected. The Q3 report states that as of the disclosure date, repair work was completed and production resumed. "The Talison Phase III chemical-grade lithium concentrate expansion project has reached design capacity. Going forward, the company will continue to debug and optimize the project to further improve production efficiency."
Here exists a subtle difference in terminology. According to investor relations activity records disclosed on August 28, 2026, the Phase III chemical-grade lithium concentrate factory is "in the ramp-up phase, expected to complete ramp-up within 2026," increasing Greenbush lithium concentrate annual capacity from1.62 million tonnes to 2.14 million tonnes, an increase of approximately 32%. The "reached design capacity" mentioned in the Q3 report refers to the capacity acceptance milestone, while ramp-up progress and continuity of stable production need to be observed in subsequent periodic reports.
The financial statements have already reflected this change. As of the end of September, construction-in-progress stood at CNY 2.895 billion, a decrease of 66.29% from CNY 8.587 billion at the beginning of the year; fixed assets were CNY 18.334 billion, an increase of 50.59% from CNY 12.175 billion at the beginning of the year. Transfer from construction-in-progress to fixed assets signifies the peak of capital expenditure has passed, but also means depreciation and amortization begin entering operating costs. Whether unit fixed costs can be diluted by new output directly relates to the sustainability of gross margins.
Another piece of the puzzle on the resource side is domestic. According to Shanghai Securities News, the Cuola lithium mine in Yajiang, Sichuan, has resources of approximately 632,400 tonnes LCE (Lithium Carbonate Equivalent) with a grade of 1.30%, and preliminary design for mining and beneficiation has been advanced. The Greenbush spodumene mine is the world's largest hard-rock lithium mine by output, producing 1.353 million tonnes of lithium concentrate in 2025, accounting for 18.9% of global hard-rock lithium mine output.
Downstream and funding arrangements include: wholly-owned subsidiary Shehong Tianqi subscribed for 79.218106 million newly issued shares of Sunwoda Power with CNY 150 million of own funds, holding 0.4978%, with the transaction completed. On July 7, 2026, the company received the "Notice of Acceptance of Registration" from the National Association of Financial Market Institutional Investors, approving a CNY 6 billion debt financing instrument registration quota valid for 2 years. As of the end of September, monetary funds stood at CNY 12.825 billion, a YoY increase of192.65%; calculated based on consolidated financial statements, the asset-liability ratio was 28.71%, up 0.67 percentage points from the beginning of the year.
05、Institutional Focus Lies on Lithium Prices
Around the time of the Q3 report disclosure, multiple institutions provided their judgments, all focusing on the same variable—lithium prices; and consistent in direction, namely a downward shift in the price center.
UBS significantly lowered price assumptions in a late September research note, cutting its 2027 China lithium price assumption from CNY 200,000 per tonne to CNY 120,000 per tonne, a reduction of 40%. Goldman Sachs placed its judgment on a longer timeline. In a report dated October 6, Goldman Sachs' Global Metals & Mining Research team proposed: "The global lithium market will shift from a supply deficit of 404,000 tonnes in 2026 to a supply surplus of 444,000 tonnes in 2028. The average spot price of lithium carbonate in China is expected to fall to USD 13,689 per tonne (approx. CNY 100,000 per tonne) in 2027, and further to USD 11,000 per tonne (approx. CNY 84,000 per tonne) in 2028, a decline of about 42% from the 2026 forecast average." Their coverage extends one year beyond UBS. CITIC Securities' view is close to Goldman Sachs'.
CITIC Securities expects: "Global lithium market supply and demand will turn into a surplus of 38,000 tonnes in 2027, and they lowered the Q4 2026 lithium price range forecast to CNY 100,000–150,000 per tonne, with future price trends depending on improvements in demand expectations and additional supply disruption risks." Management's judgment is relatively neutral.
At the H1 2026 earnings briefing, Tianqi Lithium management stated they expect the global lithium industry supply-demand relationship to remain in tight balance in H2 2026. "Demand for global power batteries and energy storage batteries continues to grow, especially energy storage demand significantly exceeds initial expectations. On the supply side, certain disruptive factors remain in H2. Overseas resource supplies may be affected by policies and logistics, and some restarted projects require a certain cycle from announcement to actual supply formation."
However, management's statements only cover H2 and do not provide directional judgments on prices for next year and the year after. Putting the judgments of the three brokerages together, the conclusion points in the same direction: this year's prices are at a cyclical high, and the center for the next two years will move downward.
Differences lie only in magnitude and timing—UBS predicts CNY 120,000 per tonne for 2027, Goldman Sachs approximates CNY 100,000 per tonne, and CITIC Securities gives a Q4 range of CNY 100,000–150,000 per tonne. For Tianqi Lithium, Talison Phase III has reached capacity, the Cuola project is progressing, and the resource-side 'volume' is certain; what is uncertain is the price these volumes can fetch. This depends on two variables: lithium prices' position in the cost cycle, and the extent of unit cost reduction brought by new capacity ramp-up. The former is mainly determined by supply-demand dynamics, while the latter depends more on the company's own operational efficiency.