CHEMICAL & MINING CO OF CHILE INC (SQM): what the price assumes

In the published model solve dated 2026-Q2, anchored at $70.05, CHEMICAL & MINING CO OF CHILE INC (SQM) is priced for +24.2% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-24.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/SQM

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 9: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.3pp.

How unusual the bet is: within-range

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.

Per-Model Detail (n=13)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• The Salar de Atacama operation behind most of the company's lithium now sits inside Nova Andino Litio, a venture in which Codelco holds 50% plus one share and takes over management in 2031.

• Realized lithium prices averaged roughly US$18 per kilogram in the first quarter of 2026 against about US$10 in the fourth quarter of 2025, so most of the earnings recovery rests on a line that rose by about 80% in a single quarter.

• Second-quarter results are due August 18, 2026, and management has said it expects realized prices above the first quarter while declining to forecast anything beyond it.

Bull Case

Full capacity is a dull phrase until you watch what it does to an income statement. Every ton the company could make in the first quarter of 2026 found a buyer, about 69,000 metric tons of lithium carbonate equivalent, roughly a quarter more than the same period a year earlier. Revenue reached US$1,760.1 million, up 69.8%, and net income came to US$364.7 million, or US$1.28 a share, against US$0.48 a year before.

Lithium is the engine and it is running hot. Lithium and derivatives brought in US$1,185.5 million in the quarter, up 135.7% year on year, into a market management describes as tightly balanced. The demand mix has quietly changed underneath that number. Battery energy storage now accounts for something close to 30% of total lithium demand, which means the commodity is no longer a pure derivative of how many electric cars get sold in a given year.

Underneath sits the reason this producer keeps landing on the right side of the cost curve. The Salar de Atacama is brine, not hard rock. The lithium concentrates by evaporation in one of the driest places on earth, and the desert supplies that energy at no charge. What such an asset usually lacks is not ore but permission, and the December 2025 partnership with Codelco settled that: production rights in the salar now run to 2060, with an overall quota increase of 300,000 metric tons of lithium carbonate equivalent through the end of 2030. Three and a half decades of licensed access is a real asset. It was bought by handing the state a controlling stake.

The second business gets almost no attention and deserves some. This is the largest iodine producer in the world, selling into X-ray contrast media and disinfectants rather than batteries, and iodine revenue rose 8.2% to US$275.9 million in the quarter on both stronger volumes and firmer pricing, with particular strength across Asian markets. Specialty plant nutrition is a third leg, where management raised full-year volume guidance to roughly 10% growth after reduced Chinese potassium nitrate exports opened a supply gap. Neither line takes its direction from lithium.

The balance sheet supports the position rather than straining it. At the close of March the company held US$3,867 million in cash and short-term investments against US$5,208 million of total debt, with shareholders' equity of US$8,216 million. That is a producer with room to fund its own expansion through a downturn, which in this industry is the difference between buying assets and selling them. The dividend policy remains half of the prior year's net income, and management has said the board will revisit an interim special distribution as the year develops.

The bull case does not require heroics from here. It requires the lithium market to stay roughly where it is while contracted volumes grow about 15% this year, iodine holds its pricing, and specialty nutrition keeps taking share from displaced Chinese exports.

Bear Case

Strip the lithium price out of the last two quarters and the growth story gets much quieter.

Today's quote requires operating profit to compound at about 24.6% a year. What the company actually delivered in the most recent full year was revenue growth of 1.0%, to US$4,576.2 million, and that followed a year in which it lost money outright. The gap between those two facts is the entire bear case, and it has a specific mechanism.

The recovery was a price event, not an operating one. Realized lithium prices averaged about US$18 per kilogram in the first quarter against roughly US$10 in the fourth quarter of 2025. Volumes rose about 25%; revenue rose 69.8%. Almost everything above the volume line came from the market rather than the mine, and the market is the one input management explicitly declined to forecast past the current quarter.

Every competitor is drinking from the same well. Albemarle sold 53,000 metric tons of lithium carbonate equivalent in its own first quarter at an average realized price near US$17 per kilogram, lifted adjusted profitability by 148%, and used the proceeds to retire US$1.3 billion of borrowings. When an entire industry turns profitable at once, in a commodity with no switching cost and no brand, the reliable sequel is supply. That is the cycle doing what cycles do, and a company whose trailing year included an outright loss is not positioned to argue it has been repealed.

There is also a question about what a buyer actually owns. Since December 27, 2025 the Salar de Atacama operation has been held inside Nova Andino Litio, in which Codelco holds 50% plus one share. The venture is consolidated and managed from here only until 2031, at which point the board expands to seven members, Codelco appoints the chair, decisions move to simple majority, and control passes. The economics survive that handover. The decisions do not.

Chile takes a substantial cut along the way, and takes it early. In the first quarter alone the venture contributed more than US$530 million to the Chilean state through CORFO payments, taxes and local government transfers, and the mining royalty currently runs between 11% and 12% of lithium profitability. That is a claim on the good years specifically, which is the opposite of the profile a cyclical wants.

The next resource project is a long way off. Salar Futuro expects to file its environmental study before the end of the third quarter of 2026, with final approval anticipated during 2029 and investment starting in 2030. A permitting calendar that runs to the end of the decade is not the profile of a business that grows into a 24.6% requirement under its own power. It is one that needs the commodity to do the work.

The methods that refuse to extrapolate say the same thing more bluntly. The price sits about 2.25 times above where the book value methods land, and about 2.33 times above where peer multiples land. The projection-based methods are alone in reaching today's quote, and they arrive there by holding the current trading multiple flat through the whole forecast. That assumption is the argument, not evidence for it.

Valuation

Half of revenue is lithium, and lithium is where the bet lives. The rest, iodine at roughly a fifth and specialty plant nutrients at about the same, behaves like a different company attached to the same balance sheet.

What today's quote requires is specific: operating profit compounding at about 24.6% a year. Against a business that earns about 23.5% operating margins on its trailing results, that is not a demand for a better company. It is a demand for a much bigger one, at current economics, quickly.

The methods used to triangulate disagree sharply about whether that is available. The price sits about 2.25 times above where the book value methods land, and about 2.33 times above where peer multiples land. Earnings power sits closer, with the price about 1.28 times above where those methods reach. The projection-based lenses are the exception, and the one stretching furthest assumes the current trading multiple stays exactly where it is for the length of the forecast. That spread is the premium, and it has a plain reading: the static frames price a cyclical chemicals producer on what it has demonstrated, while the price is paying for a commodity recovery to persist and compound. Nothing in the static frames can express a lithium price, which is exactly why they land where they do.

The balance sheet is materially stronger than a quick read suggests, and it matters here because it decides who survives the next trough. At the end of March the company held US$3,867 million in cash and short-term investments against US$5,208 million of total debt, leaving net borrowings near US$1.3 billion against US$8,216 million of shareholders' equity. Interest was covered many times over by first-quarter operating profit. This is not a company whose downside is solvency; its downside is duration, the number of quarters it would spend earning very little if the commodity turned.

One structural item belongs in any read of the price. The salar that supplies the lithium is now held in a venture Codelco controls on paper and will control in practice from 2031. A buyer today is underwriting operating control that runs to 2031, then a long partnership in which someone else sets the agenda through 2060. The quota is secure. The steering wheel is on a timer.

Catalysts

The next scheduled information event is second-quarter earnings on August 18, 2026. Management has already said it expects realized lithium prices in the second quarter to come in above the first quarter's level, while declining to project beyond that, so the print carries both a near-certain positive and an open question about the second half.

Guidance was raised across two of the three main lines when first-quarter results landed. Full-year lithium sales volumes are now expected to grow roughly 15% against 2025, with Salar de Atacama volumes alone expected to exceed 270,000 metric tons; specialty plant nutrition volumes were lifted to approximately 10% growth; iodine volumes are guided flat to slightly higher. Those are volume commitments, which makes the second-quarter revenue line largely a question of price.

Two project decisions sit inside the next few months. The Mount Holland expansion review is scheduled for early in the third quarter of 2026, and the Salar Futuro environmental study is expected to be filed before the third quarter closes, with final approval anticipated during 2029 and investment beginning in 2030. Neither changes near-term output; both set the shape of the next decade.

On capital return, the standing policy distributes half of the prior year's net income, and management said the board has taken no decision on an interim special dividend but will reassess as the year progresses. A strong second quarter is the most likely trigger for that conversation.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• ATI (ATI INC)
• FY2025 10-K: …as the ATI Europe distribution operations thru 2024. Approximately 92 % of its revenue is derived from the aerospace & defense markets including nearly 68 % of its revenue from products for commercial jet engines and 11 % from defense products. HPMC produces a wide range of high performance materials, components, and…
• FY2025 10-K: 5 per share, for fiscal year 2024. Results by Business Segment As discussed above, we operate in two business segments: HPMC and AA&S. HPMC sales increased 7% in fiscal year 2025 compared to fiscal year 2024, primarily due to higher aerospace & defense market sales. Increased demand for commercial jet engines and…
• MLI (MUELLER INDUSTRIES INC)
• FY2025 10-K: …our raw material costs and our ability to raise the prices of our products and new and changing laws or tariffs, regulations, executive orders, and enforcement priorities may impact customer budgets and create uncertainty about how such laws and regulations will be interpreted and applied, which may impact customer…
• FY2025 10-K: …of $299.1 million in the segment's core product lines, primarily copper tube and copper fittings, (ii) incremental sales of $35.1 million recorded by Elkhart, and (iii) an increase in sales of $18.3 million in the segment's non-core product lines. These increases were partially offset by lower unit sales volume of…
• HMY (HARMONY GOLD MINING COMPANY LIMITED)
• FY2025 20-F: . These factors could materially and adversely affect our financial and operating results. We compete with mining and other companies for key human resources with critical skills and our inability to retain key personnel could have an adverse e ffect on our business The risk of losing senior management or being unable…
• FY2025 20-F: …- Holistic health and wellness " on pages 141 to 153 . Mining companies face strong competition and industry consolidation The mining industry is competitive in all of its phases. We compete with other mining companies and individuals for specialised equipment, components and supplies necessary for exploration and…
• CNR (Core Natural Resources, Inc.)
• FY2025 10-K: …competitors or market preferences. In particular, as we continue to evaluate a potential new line of business involving REEs, our strategy may include expanding into the exploration, development, extraction, processing, separation, or commercialization of REEs and related downstream activities. These initiatives are…
• FY2025 10-K: …Income, net 33,904 Other Costs ( 33,992 ) Loss Before Income Tax $ ( 233,703 ) (a) Revenue and profit or loss from segments below the quantitative thresholds are attributable to the revenue and expense from various corporate and diversified business activities excluded from our reportable segments. (b) The…
• KALU (KAISER ALUMINUM CORP)
• FY2025 10-K: For custom alloys, we would begin recognizing revenue over time at the point the custom alloy billet is cast. Approximately 78% of our business is recognized at a point in time with the remaining 22% recognized over time. 38 We follow the input method of recognizing revenue over time. Under this approach, revenue is…
• FY2025 10-K: …to Net sales and Adjusted EBITDA to Net income, see below in "Results of Operations - Selected Operational and Financial Information." Metal Pricing Policies A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum and certain alloys, thereby…
• BTU (PEABODY ENERGY CORP)
• FY2025 10-K: …has established strong, strategic relationships with key suppliers and does not consider itself overly dependent on any single supplier. When Peabody has chosen to concentrate a significant portion of its purchases with one supplier, it has been to leverage cost savings from bulk purchases, secure long-term pricing…
• FY2025 10-K: …such as Btu, sulfur content, ash content, grindability and ash fusion temperature. Failure to meet these specifications could result in economic penalties, including price adjustments, the rejection of deliveries or termination of the contracts. Moreover, some of these agreements allow the Company's customers to…
• PAAS (Pan American Silver Corp.)
• FY2025 40-F: 7. MANAGEMENT OF CAPITAL The Company's objective when managing its capital is to maintain its ability to continue as a going concern while at the same time maximizing the growth of its business and providing returns to its shareholders. The Company's capital structure consists of shareholders' equity (comprising…
• FY2025 40-F: …properties of the ore affecting process recoveries and capacities of processing equipment that can be used. The mine plan is therefore the basis for forecasting production output in each future year and for forecasting production costs. The Company's cash flow forecasts are based on estimates of future commodity…
• WS (WORTHINGTON STEEL, INC.)
• FY2025 10-K: 1,200 customers during fiscal 2025 in many end markets including automotive, construction, machinery and equipment, agriculture, and heavy trucks, among others. The automotive industry is one of the largest consumers of flat-rolled steel, and the largest end market for us. During fiscal 2025, our top three customers…
• FY2025 10-K: …earnings, margins, balance sheet strengths, debt, financial condition or other financial measures; • pricing trends for raw materials and finished goods and the impact of pricing changes; • the ability to improve or maintain margins; • expected demand or demand trends; • additions to product lines and opportunities…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.