The lithium price "rises above the sky" breeds the market infinite longing? The profit guidance of Yabao, the boss of the industry, is disappointing.

As the world's largest supplier of lithium products, the American company (Albemarle Corp.) It is true that more money is expected to be made in the coming year, but as lithium prices continue to "rise above the horizon", investors are obviously not satisfied with their latest profit guidance figures!

Arbor reported its results for the fourth quarter of 2021 after trading on Wednesday. The company reported fourth-quarter net sales of $894 million, up 1.7% from a year earlier, compared with $879 million a year earlier. The rise in this figure was mainly driven by sales growth in the lithium and bromine business, which partially offset the loss of revenue from its fine chemical services (FCS).

Arbor posted a net loss of $3.8 million in the fourth quarter, compared with a profit of $84.6 million a year earlier. The net loss for the quarter was mainly related to expected cost overruns caused by supply chain, labor and COVID-19 pandemic related problems in Kemerton construction projects.

In addition, Arbor's fourth-quarter diluted loss per share was $0.03, compared with a profit of $0.79 in the same period last year. Adjusted diluted earnings per share were $1.01, compared with $1.17 a year earlier, down 13.7% from a year earlier.

Earnings guidance for fiscal year 2022 is disappointing

In the latest disclosure of financial results, the most concerned by industry insiders is undoubtedly Yabao's profit guidance for fiscal year 22, but in the end, this guidance is not as good as people think.

Yabao pointed out that the performance of all its business units in 2022 will be better than that of 2021. Capital expenditure is expected to be higher than previously planned to reach $1.3 billion-1.5 billion as the company will invest more to convert capacity to meet changing industry standards and continuing inflationary pressures.

However, while Arbor raised its earnings per share forecast for fiscal 2022 to $5.65-$6.65, the median forecast of $6.15 was still lower than the $6.24 that market analysts had expected.

Aleksey Yefremov, a senior US chemical analyst at KeyBanc Capital Markets, said the figure was "surprisingly low". Investors "had hoped to see a surge in earnings guidance because the spot price of lithium has risen so high," Yefremov said.

At the beginning of the new year, lithium prices continued to soar for most of last year. As the popularity of electric vehicles increases, the demand for lithium carbonate for batteries is rising. The already tight lithium market has become increasingly volatile because of factory maintenance and an outbreak-related labour shortage in Australia.

Yefremov had expected Arbor's Ebitda growth rate to reach 89% year-on-year in 2022, driven by the lithium business, which is a relatively conservative estimate, but the company's own guidance is only 65%. 85%.

Abel shares fell more than 7 per cent in after-hours trading in new York after falling 12 per cent at one point.

It is worth mentioning that with the introduction of new capacity at La Negra III/IV plants in Chile, Kemerton I in Australia and Qinzhou in China, Abel expects lithium production to grow by 20-30 per cent for the whole of 2022.

Among them, in terms of Chinese business, Yabao's acquisition of Chinese lithium processing plant Tianyuan in Guangxi, which includes the lithium processing plant built near Qinzhou Port, is expected to be completed in the first half of this year. Yabao also signed investment agreements with Meishan and Zhangjiagang in the fourth quarter of last year, and plans to start construction in these two areas later this year.