Shenyin Wanguo Securities Research Institute held the 2013 Summer Investment Strategy Seminar in Dalian. By combing its industry investment strategy, you can find the investment roadmap for the second half of the year.
Steel industry is concerned about low valuation companies
1. Since the year of 2013, the social inventory of steel has continued to decline, and it is now at a relatively low level. At the same time, relative social inventory (inventory/production) has also dropped to a lower level, and the overall supply pressure has begun to decline; as M2~M1 growth leads the increase in steel prices In 24 months, the former peaked, and the latter bottomed out. The current M2~M1 growth rate has already formed at the top, so the bottom of the steel price is forming.
2. According to the requirements of the Tangshan Environmental Protection Bureau, in the summer of Jingshen Expressway-Danding Expressway-West Waihuan Circle, the company implements emission reductions (about 40% of the production capacity in Tangshan), which is expected to reduce production by 40,000 tons per day, according to the fog in Tangshan area. 80% of the weather is equivalent to the weather, and the reduction will affect the annual crude steel production capacity of about 11.52 million tons; the estimated excess steel production capacity in 2013 will be approximately 170 million tons, a drop of 30 million tons from the previous year, which will affect the growth rate of steel prices in 2013. It has rebounded from the previous year (the decrease has narrowed) and steel prices are expected to stop falling in the second half of the year.
3. Investment strategy: Production cut-offs will effectively reduce the daily average production of the relevant regions, which will have a catalytic effect on the rise of steel prices in Hebei and surrounding areas. In the medium term, if the policies can be implemented to a certain extent and maintain continuity, steel prices are expected to be Continue to pick up; suggest to pay attention to low valuation steel companies in Hebei and surrounding areas: Linggang, ST Angang, Hebei Iron and Steel.
Coal industry expects follow-up policy
The economic restructuring and pressure on energy structure adjustment will lead to continued weakness in downstream demand. The overcapacity pressure in the coal industry will cause the coal price to move further downwards. The high-cost mines will face greater pressure for competition and the industry will face a new round of reshuffling. Combining the characteristics of the coal industry itself and the current economic downturn, the merger and restructuring of the coal industry is unlikely to duplicate the expansion of the steel industry and the integration of Shanxi's resources in the previous period, or it will enter a shutdown-integrated stage.
This round of integration is expected to give birth to the industry leader. Cash flow and cost-benefit companies have the resources to reserve resources and expand market coverage, and are expected to establish a dominant position in this round of integration.
Investment Strategy: The short-term industry still has room to go down, and the supporting power is still not clear. We will focus on tracking the economic downturn in the third quarter and the industry's destocking efforts. We look forward to the follow-up to the stocks superposition policy support rebound; medium and long-term attention to the industry's new round of integration may take The contraction of production capacity and the advantages of the company's expansion opportunities.
Relatively optimistic companies: China Shenhua and Lu'an Huaneng, which have abundant cash flow and cost advantages and are expected to win in the mid- and long-term industry consolidation, suggest that we pay attention to Tongbao Energy and Shanxi Coal International, which have asset injection expectations.
Defensive configuration of the power industry
Long-term investment should take into account the industry's public utility attributes, and proceed from a defensive perspective, and look for companies with high asset quality, stable growth, stable cash flow, high dividend yield, and a valuation margin of safety. It is recommended to increase Guodian Power and Huaneng Power International.
Maintaining a long-term perspective on hydropower development, policies continue to benefit, and the growing pressure on environmental protection will promote the development of clean energy. From the perspective of growth, we will look for high-quality hydropower shares. Continue to recommend Chuantou Energy and SDIC Power with endogenous growth. The rapid growth of the hydropower production on the Yalong River will continue to drive the company’s performance beyond expectations.
Under the loose pattern of coal supply and demand, coal price performance is expected to remain weak in the second half of the year and it is recommended to pay attention to Changyuan Power.
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