Lithium: recutting our preferences. Where did all the free cash flow go?

Much has changed in two months: new supply has been sanctioned including about 150kt LCE from PLS and LTR; the gap between China ESS production and installations continues to weigh on sentiment; CATL Jianxiawo mine has received environmental approvals; 2027 ESS order book expectations have edged lower; and inventory levels have become more uncertain. Spodumene pricing has moved from US$2200/t to US$1300/t QTD, with EPS momentum versus spot no longer favourable. We cut multiples across coverage to 1.0x P/NAV and 8x EV/EBITDA and recut our pecking order: IGO moves to Buy, PLS to Neutral and LTR remains at Underperform. In a lower-price environment we prefer IGO's exposure to low-cost Greenbushes, where optimisation work is substantially complete and TLEA dividends are a potential DecQ catalyst. PLS offers A$2.2bn cash but faces negative free cash flow while funding P2000, and LTR is modelled with negative FCF until 1HFY29e into the 4Mtpa expansion. Price objectives fall to A$7.30 for IGO