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Supply contraction price increase Rare property sector performance reversal value revaluation

May 15, 2019 03:35
Author: Ye Tao

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Summary
[Supply contraction price increase Rare property sector performance reversal value revaluation] Tianfeng Securities stressed that the price of rare earth at the bottom of 2018 shocks and considering some companies to reduce the value of treatment in 2018, judging that the profitability of the sector may gradually pick up in 2019. Although the average valuation of rare earth companies is currently high at current prices, the average valuation is expected to return to 23 times and below, based on the historical sector's rise. (China Securities Journal)

At present, the price of light rare earths has stabilized, and the channel of medium and heavy rare earth prices is expected to continue. According to institutional analysis, in the 2018, the price of rare earths fluctuated at the bottom and some companies were considered to be devalued in 2018. It is judged that the profitability of the sector in 2019 may gradually pick up.

  Prices continue to rise

Since 2019, the price of antimony oxide has dropped from 320,000 yuan/ton to 270,000 yuan/ton at the end of April, a drop of 16%. However, because of the high cost support, low prices are not willing to ship, downstream businesses temporarily wait and see, not eager to receive orders, the actual market transactions are not obvious.

At the same time, affected by the restrictions on the import of rare earths in Myanmar, the price of heavy rare earth lanthanum oxide rose from 1.15 million yuan / ton in November 2018 to the current 1.49 million yuan / ton, an increase of about 30%, the price in April Slightly rising.

Market participants believe that although the current pattern of rare earths has differentiated, heavy rare earth prices continue to rise, and the price of light rare earths has declined. Recently, Anhui jointly issued a special action document on rare earth blackening, and the supply side has not been loosened.real estateThe completion of the repaired area will lead to an increase in demand for home appliance air conditioners and new energy vehicles, and downstream demand will be boosted.Good futureRare earth price trend.

Affected by the market, the price of heavy rare earths continued to rise, and the rare earth plate showed a large increase. According to statistics, the cumulative increase in the rare earth index has reached 26.01% this year.Hirose,Minmetals rare earthYear-to-date has increased by 57.83% and 41.34% respectively. Recently, the market continued to adjust, and the rare earth index did not retreat. The cumulative increase in the week was 7.94%, showing a good upward trend.

  PerformanceReversal value revaluation

Recently, the import of rare earths in Tengchong Customs may be fermented again, and the risk of importing the end of the five-month transition period may continue. This has become the key to the accelerated rise in the price of medium and heavy rare earths since March.

On the supply side, due to the 2018 output of the two overseas suppliers LYNAS and Mountainpass mines, but mainly light rare earth varieties, the global production increase is limited. Short-term import of raw materials may be tense, and the channel of rising medium and heavy rare earth prices is expected to continue.

On the demand side, about 50% of downstream demand for rare earths comes from magnetic materials. In 2018, major magnetic materials companies showed an increase in revenue.interest rateSignificant declines, some small and medium-sized production capacity cleared, and market concentration further improved.TeslaThe Shanghai Super Factory is scheduled to be put into operation at the end of the year. It is expected to produce 500,000 pure electric vehicles per year. The market has a large price reduction expectation, which is expected to drive sales of new energy vehicles and increase the demand for motor magnetic materials.

Galaxy Securities believes that the representative products of medium-heavy rare earths, such as antimony oxide and antimony oxide, are expected to shrink, and the driving price will rise strongly, which will lead to the reversal of profitability of rare earth companies and the expectation of inventory value increase, which will trigger the market to revalue the value of rare earth companies.

  Tianfeng SecuritiesIt is emphasized that the price of rare earths will fluctuate at the bottom in 2018 and some companies will be treated for impairment in 2018. It is judged that the profitability of the sector may gradually pick up in 2019. Although the average valuation of rare earth companies is currently high at current prices, the average valuation is expected to return to 23 times and below, based on the historical sector's rise.

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(Article source: China Securities Journal)

                (Editor: DF380)

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