This week's industry perspective:Precious metalPrices have fallen slightly, and the Fed’s dovish statement is expected to support the price of gold.
1. The price of precious metals fell slightly. As of February 8, LME copper, aluminum, zinc, lead, tin and nickel prices were US$6,207/ton, US$1,865/ton, US$2688.5/ton, US$20,066/ton, US$210,050/ton, US$12,735/ton Compared with the previous week, 1.80%, -0.40%, -1.61%, -1.29%, 1.06%, 2.21%; gold and silver prices were $131.85/oz and $15.78/oz, respectively, -0.29 compared with the previous week. % and -1.44%.
2. The Fed’s dovish statement is expected to support the price of gold. On January 31, Beijing time, the Fed’s first FOMC meeting on interest rates announced in 2019 that it would not raise interest rates and maintain the federalfundinterest rateThe target range is unchanged from 2.25% to 2.5%, and this decision is in line with market expectations. The Fed meeting stated that it is more dovish, indicating that the Fed’s slowdown or even a pause in the probability of a rate hike and a shrinking process will support the price of gold.
3. SMM released the production data of China's basic metals in 2018. In December 2018, China's refined copper output was 761,600 tons, a year-on-year increase of 2.37%; the annual cumulative output was 8,734,200 tons, an increase of 9.1%. The output of electrolytic aluminum was 2.992 million tons, a decrease of 0.3% year-on-year; the cumulative output for the year was 36.117 million tons, a decrease of 0.6% year-on-year. The output of primary lead was 274,000 tons, up 3.49% year-on-year; the cumulative output for the year was 2,995,300 tons, down 8.57% year-on-year. The refined zinc output was 448,400 tons, a year-on-year decrease of 7.29%; the annual total output was 5.331 million tons, a year-on-year decrease of 2.43%.
4. The supply of rare earth ore will be tightened. On January 4, 12 departments including the Ministry of Industry and Information Technology, the National Development and Reform Commission and the Ministry of Natural Resources jointly issued the "Notice on the 12th Department on Continuously Strengthening the Order Rectification of the Rare Earth Industry", clarifying the division of tasks, main objectives and implementation measures for strengthening the order rectification of the rare earth industry. It is convenient for the central government and local governments to form joint efforts to strengthen the punishment of violations of laws and regulations. We believe that the supply of rare earth minerals in China will be tightened as relevant departments strengthen the management of rare earth supply terminals.
5. Risk warning: The Fed’s interest rate hike exceeded market expectations; the global economic recovery was slow; downstream demand continued to weaken; metal prices fell sharply.
This issue [excellent push]:Shandong Gold(600547).
Shandong Gold(600547) (2019-02-01 closing price of 30.90 yuan)
Core recommendation reasons:
1, we seeGood futureThe price of gold. Since 2018, with the changes in the global trade situation, the economic growth momentum of emerging and developed economies has declined. The IMF has lowered its global economic growth forecast for the first time since 2016 and lowered its forecast for US economic growth. Fed Chairman Powell’s latest statement mentioned that the US housing market growth rate is slowing down. The fiscal stimulus, which is mainly based on tax cuts and increased fiscal expenditure, may gradually fade away from 2019. We believe that this is a hint of the Fed's rate and pace of interest rate hikes in the future. We have seen that the yield spreads of the US 10-year and 2-year bonds have been narrowing, the yield curve has flattened and there is the possibility of upside down, which means that the future economic situation of the United States is not optimistic. Updated by the Federal Reserve when it raised interest rates in September 2018interest rateThe expected dot-matrix shows that the Fed will raise interest rates once again in 2018, raise interest rates three times in 2019, and raise interest rates once in 2020. According to the latest federal funds rate futures trading, the Fed may raise interest rates once in 2019, and the probability of raising interest rates more than three times is minimal. If the Fed’s interest rate hike slows down, the suppression of interest rates on gold prices will be alleviated, which will benefit the gold price trend.
2. Recommend Shandong Gold. The company is a gold-based production company. In 2017, the company's mineral gold production was 35.88 tons. In the first half of 2018, the output of mineral gold was 19.39 tons, a year-on-year increase of 25%. As the cost of mining is relatively fixed, the company will benefit from the rise in gold prices.
profit predictionAnd investment rating: We expect the company's 2018-2020 EPS to be 0.56 yuan, 0.65 yuan, 0.76 yuan, maintaining a "buy" rating.
Risk warning: mineral gold production is not up to expectations; gold price fluctuation risk; production cost increase; natural disasters, environmental protection and other unexpected events lead to production disruption.
(Article source: Cinda Securities)