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[信息讨论] Sector Focus: Mining - Miners not priced for a strong recovery [复制链接]

Artcore

银靴族

发表于 2009-5-6 09:51 |显示全部楼层

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Strategy Team View
Leading indicators point to strong world growth recovery and commodity price inflation. Excess liquidity is pointing to world IP growth of 8% over the next year, and commodity price inflation in excess of 30%. Even if consumer demand does not recover in the short-term, re-stocking can deliver a strong bounce in world IP over the next year. Later on, demand recovery can gain traction, laying the platform for sustained growth.

Miners look expensive on current commodity prices, but are actually cheap for a strong recovery scenario. Mining stocks are 20% expensive relative to commodity prices, and 30% expensive on a PE basis. But if commodity prices rise by 30% (or more) and volumes recover, EPS could more than double. In this scenario, miners would actually be cheap on a PE basis, with growth to come in 2010/11.

Mining Team View
We have run the numbers for the strong recovery scenario. Key findings:

Sector FY11 PE drops from 9.0x in the base case to 6.3x in the upside scenario.

RIO trades on 2010 price/cash earnings of 4.4x. BHP trades on FY11 price/cash earnings of 7.1x. Rio gearing (net debt:net debt+equity) falls to 38% as at December 2010 (our forecasts and metrics for RIO are restricted to exclude any possible deal with Chinalco).

With another capital raising behind it, AWC's balance sheet now looks to be fixed and under our upside case it trades on 2010 price/cash earnings of 6.1x.

Our nickel names have run hard in the past three weeks and the value is now much harder to find - even under our upside case. For those looking for nickel exposure, PAN and MBN have the stronger valuation support.

In copper OZL has significant leverage to both the copper and the gold price, and may have a significant cash balance post the MinMetals transaction. We would view OZL as having the lowest risk profile in the space, given execution risk around project delivery for EQN and near-term re-financing risk for PNA.

For the coal space our preferred pick is FLX. Under the upside scenario valuation support emerges for FLX, MCC and CEY.