Momentum Stock Watch: Sociedad Química y Minera de Chile S.A. (SQM)

Company Profile:

Sociedad Química y Minera de Chile S.A. produces and distributes specialty plant nutrients, iodine and its derivatives, lithium and its derivatives, industrial chemicals, potassium, and other products and services. The company offers specialty plant nutrients, including potassium nitrate, sodium nitrate, sodium potassium nitrate, specialty blends, and other specialty fertilizers for crops, such as vegetables, fruits, and flowers under the Ultrasol, Qrop, Speedfol, and Allganic brands. It also provides iodine and its derivatives for use in medical, pharmaceutical, agricultural, and industrial applications comprising x-ray contrast media, polarizing films for LCD and LED, antiseptics, biocides and disinfectants, pharmaceutical synthesis, electronics, pigments, and dye components. In addition, the company offers lithium carbonates for various applications that include electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-resistant glass, air conditioning chemicals, continuous casting powder for steel extrusion, primary aluminum smelting process, pharmaceuticals, and lithium derivatives. Further, it supplies lithium hydroxide for the lubricating greases industry, as well as cathodes for batteries. The company sells its products through sales offices and a network of distributors in Chile, Latin America, the Caribbean, Europe, North America, Asia, Central and South America, and internationally. Sociedad Química y Minera de Chile S.A. was founded in 1968 and is headquartered in Santiago, Chile.

Recent News:

The company reported earnings for the three months ended March 31, 2019 of US$80.5 million (US$0.31 per share), a decrease from US$113.8 million (US$0.43 per share) reported for the three months ended March 31, 2018. This result is in line with its expectations.

The company is currently working on our lithium carbonate expansion to produce 120,000 metric tons per year. They believe this expansion will be completed during the second half of 2021, with a capex of approximately US$280 million. They are also expanding our lithium hydroxide capacity in Chile to 29,500 metric tons in 2021; the expected capex for this project is US$100 million.

Fundamental Analysis:

Ninestocks analyzes several different financial aspects: Growth, Profitability, solvency and efficiency.

Growth – Measures the growth of both the company’s income statement and cash flow.

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Profitability – Measures the historical price movement of the stock.

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Solvency – Measures the solvency of the company based on several ratios.

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Efficiency – Measures the strength and historic growth of a company’s return on invested capital.

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Conclusion:

SQM’s strengths can be seen in its better growth and strong profitability compared with its peers. Its revenue and net income have increased over recent several years. Technical indicators signal the bullish signs, as there is a bullish crossover in MACD and Stochastic oscillator, the RSI(14) stands at 45.39 with positive bias. We rate Sociedad Química y Minera de Chile S.A. (SQM) a STRONG BUY.

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