文档介绍：迅嘉机构内参-
January 22, 2010 China: Metals & Mining
January 22, 2010
China: Metals & Mining

Position for inflation acceleration/policy tightening, prefer upstream
More signs of growth strength, more signs of inflation acceleration Midstream margin and valuation peak before CPI
Margin CPI
(1) Commodity prices have surged 20% since the beginning of 4Q09 as yoy%
% Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05
14 8%
demand growth accelerates; see our Nov 6 report titled“Taking the pulse China Upstream
13 inflation
mining 7%
of construction value chain; growth accelerating”. 12 (right scale) margin
11
(2) With higher growth, we see higher inflation risk. Our channel checks 6%
10
indicate the infrastructure bottleneck is so severe that demand for cargo 9 5%
Midstream
8
transportation vs. fulfillment at one major railway bureau has spiked to processing 4%
7 margin
6
:pared to 1:1 fulfillment in 4Q08 and below 50% utilization. 3%
5
(3) We maintain our view that China demand will remain structurally 4 2%
strong although the path may e more volatile. We expect a
Jul-08
Apr-08
Oct-07
Jan-08
Jun-08
Feb-08 Mar-08
Aug-07 Sep-07 Nov-07 Dec-07
Aug-08 Sep-08
May-08
higher risk premium for the sector as policy tightening risk rises with P/E CPI
(X) yoy%
Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05
inflation pressure. Initial signs of a slowdown in property sales prompt 15 8%
China
Yanzhou
us to search for protection in margins and multiples. 14 inflation
Coal P/E 7%
13 Chalco (right scale)
12 P/E 6%
Look for margin security, which varies along the value chain 11
5%
(1) Upstream sectors likely to have better pricing power, although rising 10
9 4%
demand is generally positive for modity prices. 8
3%
(2) Midstream processing (steel/aluminum/cement), could face margin 7
6 2%
pressure