Significantly undervalued, CY20e EV/EBITDA of 1.2x, page-66

A40 share price is heavily undervalued: fair Mkt cap ~ $500 AUD

Ten years ago, the electric vehicle revolution was coming.

Today, it's happening.

And even though the EV business has grown significantly over the past several years, the market is just now prepared to really take off. Global electric vehicle production is expected to increase by more than 30x in the next 15 years alone! And as a result, lithium demand is expected to follow.

Much of the increase in demand for EVs is expected to come from new government regulations on vehicles aimed at creating less pollution. In China, for example, officials set a mandate for all automakers with annual sales of more than 30,000 vehicles in the country that will require 10% of all car sales to be all-electric or plug-in hybrid vehicles. By 2025, China wants a fifth of all cars sold in the nation to run on alternative fuel.

The growth of the EV market in China and elsewhere has already created a significant increase in the demand for lithium. Since 2000, lithium demand has almost quadrupled.

Global lithium demand projections for the future range from a conservative 10% CAGR over the next 10 years to doubling by the end of 2020.

However, there are no expectations of weakening demand in 2019 or over the longer term.

So while an oversupply pulls down on lithium right now, long-term demand is likely to wipe out surplus, and prices for the battery metal will continue their march higher. That makes 2019 a great year to be a lithium buyer.

https://www.energyandcapital.com/report/lithium-investment-outlook-2019/5012