Metal industry investment looking for capacity constraints and demand recovery in excess of expectations

Looking for "capacity constraints" and "demand recovery" hyper-expectations--2009 metal industry investment strategy Yepepe Shenwan Research offshore Metals industry analysts Hong Kong's non-ferrous metals stocks have continued to rise after a strong rise last November to the first quarter of this year.　　Is there a more predictable price catalyst in the future? Wanguo The investment strategy of Hong Kong's metals industry analyzes the impact of future events on the industry from the perspective of recovery expectations, dollar movements, inflation expectations and demand and supply changes, and recommends a corresponding portfolio. It is suggested that, in addition to the liquidity that the money supply may lead to the increase in metal prices, the "capacity constraints" and "demand recovery" of some metal industry chains will exceed market expectations, thus leading to investment opportunities for metal stocks.　　Wanguo optimistic about the investment opportunities in the copper, lead and zinc industries, that the above varieties are most likely because of upstream "capacity constraints" and downstream "demand recovery", resulting in a phased "supply and demand gap", which led to price increases. In investment strategy and portfolio selection, through two clues for stock selection, one is to benefit from the metal industry chain in the most likely stage "supply and demand gap" companies, the second is to benefit from the Chinese Midwest industry transfer investment target.　　Recommended Jiangxi Copper (358HK), China Aluminum (2600HK), Zijin Mining (2899HK) and Ma Steel Shares (323HK). Through the screening of various influencing factors of metal price, Wanguo put forward "ulic" model, i.e. inventory days (Inventory), dollar trend (USD Index), inflation (CPI) and economic expectation (leading indicator) Is the most important factor affecting the profitability of metals. In particular, the number of days of inventory is most affected.　　Through the recent domestic and foreign economic situation and the upstream and downstream analysis of the industrial chain, Wanguo's view of the metal industry is more optimistic than the market consensus, and thus raised the price of copper, lead, zinc, from the latest forecast up 15-20%. Wanguo that some metal varieties, such as copper, lead and zinc, will be in stock days better than expected. On the one hand, upstream production rate is far lower than downstream smelting capacity will lead to a certain supply of tight. On the other hand, metal-related downstream industries, such as real estate, automobiles, power grid equipment, home appliances, lead-acid batteries exceed the expected demand recovery, will bring a phased "demand gap", leading to price increases. In addition, state reserves will further digest the surplus supply, and stimulate the price rise. Unlike the market, Wanguo that the country's recent sale of copper is aimed at suppressing the tracking of buying, rather than stopping the store.　　Future purchases will be more low-key, aimed at China's most scarce metal varieties, such as copper. In addition, wanguo that expectations of domestic and foreign economic recovery, weaker dollar expectations and inflationary expectations will affect the international bulk metals market, supporting metal prices upwards. On the one hand, U.S. real estate sales and other data better than expected,The release of commercial bank loans will help push the U.S. economy to a steady decline. On the one hand, PMI indices in major countries such as the United States, Europe, Japan and China in particular have brought economic confidence to the market.　　Wanguo that the dollar could be weakened by the current relative strength at the end of the three quarter, and that ample liquidity would strengthen inflation expectations in the second half of the year, helping to raise the upward trend in metal prices.　　Judgment and prediction of metal sub-industries: (1) in copper, aluminum, lead, zinc and other basic varieties, Shenwan that copper is the most likely to appear supply and demand gap of varieties, despite the decline in import growth, copper, such as national storage and other short-term copper prices have negative impact, but the trend of strong long-term strength is more obvious. (2) The factors such as the reluctant of mining in lead-zinc industry, the slow production and the shortage of waste lead will restrain the excessive release of smelting production capacity to some extent.　　and downstream galvanized plate, lead batteries or in the second half of the expected demand rebound, thus supporting the price rebound. (3) Wanguo is cautious about the profit situation of electrolytic aluminum industry, spare capacity production will be the aluminum price of future pressure, the potential increase in the price of the sales of electrolytic aluminum enterprise production costs, accelerate high cost capacity to exit the city often Wanguo optimistic benefit from the electrolytic aluminum industry integration expectations, and directly benefit from the "large user direct purchase power pilot"　　Leading enterprises, such as the Chinese Aluminum Industry (2600HK).　　(4) Short-term risk factors weaken the impact of gold price shocks adjustment, but bullish on the future dollar weakness and inflation expectations supported by the gold price in future.　　Pre-judgment of the recommended stock price Catalyst: Jiangxi Copper Industry: Profit potential copper price rises; Long single TC/RC ratio is higher, profitability will be stronger than the same industry; Chinalco: "Large users direct purchasing power" will highlight the company's cost advantages, industry backward capacity elimination and industry integration will further expand the company's market share, improve bargaining power. Zijin Mining: Potential acquisition of resources will bring about a rapid increase in the amount of metal stocks: a higher proportion of long material benefits infrastructure investment; higher ore long single ratios highlight the advantages of falling costs.