大家要谨慎
贴个大行的报告，e文的，大家耐心看下：
Industry context
Over the weekend, the government of China announced a fiscal stimulus
package of Rmb4 tn through 2010, boosting spending in the key area of
domestic demand with a key focus on infrastructure spending.
Analysis
1) We believe the fiscal rescue package is incrementally positive but
expected, given how sharply construction activities slowed down in October
with prices of demand-sensitive sectors such as steel and aluminum down 24%
and 13% mom and trading below cash costs. 2) While details of the plan are
still unclear, we believe another way to analyze the package is from a funding
perspective. We estimate government funding accounts for about 15% of total
Fixed-Asset Investment (FAI), while business and private sector accounted for
85% in 2007. In a global slowdown environment, we believe there will be a
large reduction in business/private sector spending, which we think will be
difficult to make up by increasing government spending. 3) Key conclusion:
We believe the infrastructure spending boost may not be enough to offset the
slowdown in two other key demand drivers—the China property sector (1.3X
more spending than infrastructure) and exports, both of which led to the sharp
October drop in commodities demand.
Subsector impacts/Stock actions
(1) After a strong rise in share price on November 10 and almost doubling
from recent trough reached two weeks ago, we see a disparity opening up in
selected sectors. (2) Copper: A global commodity with limited demand uplift
from China infrastructure spending, we see the potential for greater-thanexpected
earnings downside for Jiangxi Copper (JXC; Sell, Conviction Sell).
Our 12-month price target of HK$3.3 implies 35% downside. (3) Coal:
Incremental negatively affected by infrastructure spending—more railway debottlenecking,
key supply anchor for coal. Our top coal Sell idea is Yanzhou
Coal. (4) Steel: Neutral given limited fundamental boost (25% of demand from
infrastructure, with 25% in property and 50% from manufacturing) and
undemanding valuation (around 0.5X P/B). (5) Cement: Has the greatest
benefit potential from infrastructure spending (40% of demand), so we would
rather be sitting on the sidelines given combination of uncertainty in the
size/timing of the package vs. mid-cycle valuation.
Key risk to our negative stance: unexpected further government spending
Stimulus package expected, yet upside surprise in size
1. The ten measures, as highlighted in Exhibit 1, aim mainly to boost domestic
consumption.
2. Details of the package are still vague at this point, especially with respect to the annual
spending size, sector allocation, and funding source.
3. The infrastructure spending portion, estimated at Rmb1 tn, was revealed last week in
the separately reported packages for railway, other transportation (highways, ports,
and urban light rail system upgrades), and Sichuan earthquake rebuild efforts.
4. Putting it into perspective, we estimate total construction spending is about Rmb5.7 tn
(infrastructure about Rmb2.5 tn and property capex about Rmb3.2 tn), implying the
potential Rmb1 tn infrastructure spending could boost construction by about 18%.
− Looked at another way, infrastructure spending could be boosted by 40%,
potentially offsetting the property capex (estimated at Rmb3.2 tn in 2008)
slowdown by 31%, in our view.
− We see risk to property spending. As highlighted in Exhibit 2, property capex has
been the bright spot, growing year over year at 29% year to date.
Top Sell ideas: Jiangxi Copper and Yanzhou Coal
1) Jiangxi Copper: Two main earnings drivers weakening
• Copper prices have dropped by 31% from September to October. If we use the current
spot copper price of US$1.8/lb versus our 2009 assumption of US$2.5/lb, JXC could
see earnings potential downside of about 54% to projected 2009 EPS
• Sulphuric acid, a key by-product to offset smelting loss, disappoints on the downside.
The current price of Rmb200/t is down 80% from September’s Rmb1000/t level,
widening the smelting loss.
• If we use the current copper price of US$1.8/lb, JXC would be trading at 7.7X 2009E
EV/EBITDA versus the peak of 13X and trough of 2X.
• Our 12-month target price of HK$3.3 is based on 2009E EV/EBITDA of 3.6X.
2) Yanzhou Coal (YCM): Incremental hurt by infrastructure spending
• We believe the railway bottleneck is a key supply constraint for domestic thermal coal.
The proposed railway spending highlights further railway upgrades in the key West to
East transportation routes, potential putting pressure on coastal coal supply on top of
already-eased railway restraints on demand weakness.
• Domestic thermal coal demand is largely driven by power generation, mainly in
manufacturing activities, and is unlikely to benefit directly from infrastructure
spending.
• Domestic spot prices are still expensive relative to regional and oil prices. Current oil
prices suggest a domestic spot price of Rmb494/t, or 37% downside potential from the
current levels. Regional coal price also has pulled back by 47% from peak while
domestic is down only about 22%.
• Our sensitivity analysis shows that, if spot price drops to Rmb434/t (using US$50/bbl
and a 26% mid-cycle value of coal to oil), YCM EPS could drop to HK$0.56 with the
shares trading at an 8.1X 2009E P/E multiple versus the trough of 3X and mid-cycle of
6X.
• YCM's 12-month target price of HK$7.2 is based on '09E P/E of 5X.
