Central China Securities Co.,Ltd. has released a research report stating that, as of June 22, the price-to-earnings ratio (PE) for the nonferrous metals sector (calculated by the overall method, TTM, excluding negative values, same below) is 22.72 times. The PE for the precious metals segment is 21.01 times, for the industrial metals segment is 16.57 times, and for the rare metals segment is 50.65 times. Benefiting from a series of domestic supportive policies taking effect, the economy maintaining a positive trend, and increasing demand for nonferrous metals both domestically and internationally, the firm maintains its "Outperform" rating for the nonferrous metals and new materials industry. It recommends focusing on the precious metals, copper, aluminum, and superhard materials sectors.
Key Investment Perspectives
Precious Metals: Long-term allocation value for gold is prominent. In the short term, influenced by escalating geopolitical tensions in the Middle East, rising international oil prices, heightened inflation expectations, and increased expectations for Federal Reserve rate hikes, the gold price is under pressure. From a medium to long-term perspective, the climbing US fiscal deficit rate and the marginal weakening of the US dollar's credibility are driving central banks worldwide to diversify their foreign exchange reserves. Concurrently, persistent global inflation, prolonged geopolitical risks, coupled with rising financial market volatility, significantly boost the safe-haven demand for gold. Supported by these factors, the medium to long-term price center for international gold is expected to rise steadily.
Copper: Intensified mine-smelting contradictions and a tight long-term supply-demand structure. On the supply side, declining global copper ore grades, limited new mining projects due to long-term insufficient capital expenditure, and increased disruptions at the mining end collectively constrain supply growth, leading to a persistently tight copper concentrate market. On the demand side, copper demand from sectors such as power investment, new energy vehicles, and data center construction provides strong support. Against the backdrop of tight copper concentrate supply and booming green demand, the price center for copper is expected to remain at elevated levels.
Aluminum: The industry's supply-demand structure is gradually moving towards a tight balance or slight surplus, with the sector maintaining high prosperity. On the supply side, domestic capacity is constrained by the 45 million ton "ceiling," with operating capacity already at high levels and new capacity additions being extremely limited. Although there are some capacity plans overseas, progress is generally slow due to constraints like power infrastructure and resource availability. Furthermore, shipping disruptions in the Strait of Hormuz have led to a contraction in aluminum supply. The demand side exhibits structural resilience. Additionally, the sector possesses dividend attributes.
Superhard Materials: Chip cooling enters the "diamond era." Continuous breakthroughs in functional diamond technology are opening new growth avenues for the industry. In particular, diamond/copper composite materials and diamond heat sinks for high-end chip cooling are widely regarded as key short-term development directions and potential industry growth points.
Risk Factors to Consider
Potential risks include: (1) Metal price declines due to Federal Reserve rate hikes exceeding expectations; (2) Insufficient downstream demand caused by a global economic recession exceeding expectations; (3) Metal price shocks from mine output exceeding expectations; (4) Slower-than-expected progress in functional diamond R&D; (5) Significant fluctuations in raw material prices; (6) Impact of geopolitical conflict factors; (7) Lower-than-expected demand for ores like copper and aluminum; (8) Manufacturing sector growth falling short of expectations.
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