Metals News
[Taishan gold and stone] can the rare earth market last?
May 27,2019
Source:Sohu Finance and Economics
The content below was translated by Tencent automatically for reference.

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What did you push last week?

Last week, the market rose and fell back, the market as a whole concussion lower, the market mood is relatively depressed, the volume can maintain a depressed state, Prev weekly increase of-1.02%; The news continues to be complicated and confusing, Huawei incident is becoming more and more serious, seriously suppressing the market risk preference;

We said in last week's weekly report that "downward resistance is much less than upward resistance, the market may continue to shock adjustment trend", suggesting that investors systematically lower their positions; at present, the market trend is more in line with expectations.

Last week's stock recommendation review: cloud computing-related stocks rose and fell back, with a weekly rise of-1.71% and a wave of information week of-0.13%. The enterprise cloud is one of the most certain trends in the next few years, and the future opportunity is still optimistic. Hesco weekly increase of + 0%, the company has built a complete innovative drug research and development system, innovative drugs have become a echelon, optimistic about the company's later performance release.

Looking ahead to this week, wait patiently for signs of stabilization in the market. At present, the market has been limited, investors' enthusiasm for participation has dropped to a low level, superimposed peripheral events still have great uncertainty, A-share risk has not been fully released;

We believe that perhaps only when the market goes down to fill the gap and get rid of the shock range will there be a real signal of stabilization, while a trend opportunity in the market will require a substantial mitigation of external risks. At present, it is proposed to maintain 30% of the position.

The focus of "his Mountain Gold and Stone" this week

1. Don't be so pessimistic, positive factors are emerging!

2. The strategic position has risen sharply, but can the rare earth market continue?

3, enter internationalization, gross profit margin second only to Ningde, this power battery company is waiting to break through!

How's the market?

Don't be so pessimistic, positive factors are emerging!

The recent market trend is more depressed, the market sentiment is more pessimistic, investors feel that the market has lost the trend, for the future direction is very confused.

Tianfeng Securities believes that since mid-April, the second "N-shaped" dominant factors have experienced three negative effects: the marginal tightening of monetary policy, the revision of fundamental expectations, and the impact of trade wars.

Although the market man is still confused, the marginal positive factors are beginning to emerge.

On the economic front, mid-May (before and after the release of April data) is expected to have been revised more fully. A number of data are expected to improve slightly in May after a sharp correction in April. Overall, domestic demand in May is expected to be basically the same as January-April, down slightly from the first quarter, but external demand is still marginal deterioration.

On the policy side, counter-cyclical policy efforts are likely to be re-added. Directional reduction and MLF increase continue, the short-term funding level continues to stabilize, it is expected that the follow-up liquidity may usher in a significant improvement.

In the short term, the expected correction of the market to the fundamentals is relatively sufficient, the expected revision of the policy has not yet been fully reflected, but there is no obvious expectation difference. At present, the market is weakened by internal factors, and the main interference factors are external.

200 billion the impact of tariff increases on market sentiment has been digested in the week of May 6, and the remaining 300 billion tariff increases are twists and turns in the negotiations. The political cost of sustained tax increases is even higher for the United States. China and the United States still have a good chance of reaching an agreement at the trade level. The time may be delayed a little.

There are also a number of positive factors that are gradually emerging:

First, Science and Technology Innovation Board gradually approached, some of the growth concept stocks began to be active again, and the catalysis of reform did not cool down.

Second, after the central bank stated its position and issued the central note offshore, the RMB exchange rate did not have to worry about the need for devaluation;

Third, foreign investment (exchange rate concerns) continued to flow out, but the market has shown resilience in the current position, indicating that the early response to internal and external factors has been more adequate, with endogenous support.

Overall, the market does not need to be overly pessimistic.

New era Securities believes that this adjustment is a big break in the early part of the bull market and will not change the pattern of turning bears into bulls: in terms of amplitude, it is relatively sufficient, but the time may not be enough. So the market will still be in a state of rest for some time to come, but the speed may slow down, and even concussion recuperation will not be ruled out. Starting from the third quarter, the market will re-enter the upward trend.

The basis for renewed strength in the second half of the year still exists. Because: (1) after the withdrawal of infrastructure investment in 2018, the economic resistance is still OK; (2) the pain of deleveraging is temporarily over, and the advantages such as tax reduction and fee reduction are still fermenting; (3) the inventory cycle and capacity cycle will gradually begin to rise at the same time; (4) the plate structure is more balanced than before.

What do you want to see this week?

Strategic position rises sharply, but can rare earth market continue?

State leaders visited Jinli permanent Magnet in Jiangxi on May 20, 2019 to understand the management of enterprises and the development of rare earth industry. Subsequently, it is pointed out that rare earths are important strategic resources and non-renewable resources. It is necessary to strengthen scientific and technological innovation, constantly improve the technological level of development and utilization, extend the industrial chain, increase added value, and strengthen project environmental protection. To achieve green development and sustainable development. As a result, the rare earth market broke out.

Founder Securities believes that rare earths are traditional varieties of trade disputes. On May 13, 2019, the tariff Committee of the State Council decided to impose a 25% tariff on a series of rare earth metal mines imported from the United States. As early as in the history of trade wars, rare earths are the focus of various countries on the variety of resources.

As a strategic resource, rare earth is a necessity for the manufacture of cutting-edge weapons. In addition, rare earth permanent magnet, which is the raw material needed in high-tech products such as laser, Sonar, satellite, radar and so on, is also the main product of rare earth.

China is the largest country in the world in terms of rare earth resources, production and import and export.

China is rich in rare earth ore reserves of 44 million tons, accounting for 36.7 per cent of the world's total. In 2018, the global (REO) output of rare earth minerals was 170000 tons, while the (REO) output of Chinese rare earth ores was 120000 tons (excluding black rare earths), accounting for 70.58 per cent. Exports of rare earths reached 53000 tons in 2018, up 3.58 per cent from a year earlier. It became the largest importer for the first time in 2018, importing 41400 tons of (REO).

China dominates the links of rare earth mining and smelting, with obvious advantages.

In 2018, the global rare earth ore output was 170000 tons, China's output was 120000 tons, accounting for 71%; the global rare earth smelting separation output was 146000 tons, and China's output was 115000 tons, accounting for 78.8%. China's rare earth patent applications increased by 250 per cent between 2011 and 2018.

Patents in Japan and the United States are mainly concentrated in deep processing applications downstream of rare earths, while Chinese patents are concentrated in mining, separation and smelting. Due to technical, environmental protection, cost and other reasons, although there are rare earth resources abroad, they can not meet the needs of their own rare earth minerals and rare earth smelting products in the short term.

China Merchants Securities believes that the reconstruction of the domestic rare earth industry chain in the United States is far away, and there is no smelting separation capacity at present. The application of import tariffs will significantly increase the operating costs of US rare earth enterprises. In the context of falling prices of rare earths, continued operation is facing challenges, and the US rare earth industry may be hit.

At present, the price of medium and heavy rare earth products and the differentiation of light rare earth products are mainly due to the lack of medium and heavy rare earth ore supply in Myanmar after Tengchong closed on May 15. Rare earth prices will continue to rise, including light rare earths such as praseodymium and neodymium are expected to stop falling, medium and heavy rare earth dysprosium terbium will continue to rise.

Related targets: Guangsheng Nonferrous, Zhongke three rings.

Good. Where's the company?

Enter internationalization, gross profit margin is second only to Ningde, this power battery company is waiting to break through!

Guoxuan Gaoke recently announced that Hefei Guoxuan Gaoke Power Energy Co., Ltd. ("Hefei Guoxuan"), a wholly owned subsidiary, and TataAutoComp signed a "joint venture agreement" in Hefei, and the two sides intend to jointly invest in and set up a joint venture in India. Main battery related business. Hefei Guoxuan, which contributed 40 million Indian rupees in cash, will hold a 40 per cent stake.

Guangzhou Securities Hang Seng believes that TataAutoComp is a subsidiary of India's TataGroup, and its parent company, TataGroup, is the largest car company in India. The joint venture with Tata will fully integrate the advantages of the company's power lithium battery technology and TataAutoComp's battery cooling system, BMS and other areas, and help speed up the international market development of the company's products.

At the same time, following the signing of the procurement framework agreement with BOSCH in February this year and the successful entry into the BOSCH global supply chain, the company's internationalization process has achieved results again.

The company mainly focuses on lithium iron phosphate line, 2018 the company achieved full-year battery sales of 1.276 billion AH (YoY+70.09%), equivalent to 4.08GWh. Power battery shipments ranked third in the industry, second only to Ningde Times and BYD. The company plans to sell 14.45GWh 's power battery products in 2019, with a sales target of 254.16 per cent more than the actual year-on-year sales in 2018.

Judging from the change of gross profit margin in recent years, the gross profit margin of lithium power business is 48.71% 39.81% 28.80% respectively, which is close to that of Ningde era and higher than that of the representative enterprise of the second echelon.

Judging from the comparison of the current gross profit margin, although the company mainly ships lithium iron phosphate products with lower prices, the company's cost control ability is still not weaker than that of the leading battery enterprises, and has benefited from shifting the diaphragm procurement to the joint venture subsidiary. 2019Q1's gross profit margin rebounded from 2018 as a whole.

Northeast Securities believes that in 19 years of new energy passenger car subsidies generally reduced by more than 50%, under cost pressure 300km to continue models below or will return to the tide of iron lithium. With the stimulus of new energy bus subsidy policy, bus sales can be cautiously optimistic. Iron lithium scene demeanor recovery, space is guaranteed, at the same time, the company's large cylindrical products are widely recognized, the future performance is expected to be released gradually!

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