Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Equity Bottom-Up

Angang Steel Co Ltd (H) / Equity Bottom-Up

INVESTMENT VIEW: The recovery in China’s March PMI index to 50.8 shows an unexpected expansion in economic activity.  Historically, there is a strong correlation between the PMI and Chinese steel prices as well as Angang’s share price. 
We close our short on <a href="https://www.smartkarma.com/entities/203" target="_blank" data-smartkarma-citation="entities:203:1">Angang Steel Co Ltd (H) (347 HK)</a> shares.

INVESTMENT VIEW: The recovery in China’s March PMI index to 50.8 shows an unexpected expansion in economic activity.  Historically, there is a strong correlation between the PMI and Chinese steel prices as well as Angang’s share price. 
We close our short on Angang Steel Co Ltd (H) (347 HK) shares. 

Angang Steel: PMI Recovery to Support Shares: Close Short

<ul class="">
<li>We believe overproduction and lower steel prices into 1H19 will lead to material downward revisions in Angang’s NTM EBITDA forecasts and its stock price.</li>
<li>We reiterate our earlier call to sell <a href="https://www.smartkarma.com/entities/203" target="_blank" data-smartkarma-citation="entities:203:1">Angang Steel Co Ltd (H) (347 HK)</a> and cut our PT to HK$5.00. </li>
<li>We take cold comfort from Vale’s recent comments that they “don’t see steel prices going back to historical [low] levels”.</li>
</ul>


We believe overproduction and lower steel prices into 1H19 will lead to material downward revisions in Angang’s NTM EBITDA forecasts and its stock price.
We reiterate our earlier call to sell Angang Steel Co Ltd (H) (347 HK) and cut our PT to HK$5.00. 
We take cold comfort from Vale’s recent comments that they “don’t see steel prices going back to historical [low] levels”.


Angang Steel: More Pain Ahead on Chinese Steel Overproduction.  PT Cut to HK$5

INVESTMENT VIEW: Despite having pushed out the timing on our call for a meaningful correction in steel prices, we remain Cautious on the outlook for Chinese steel earnings and Angang shares into 2019.  In addition, we see a number of headwinds, beyond pricing, challenging the sustainability in peak-of-cycle earnings.  Our <a href="https://www.smartkarma.com/entities/203" target="_blank" data-smartkarma-citation="entities:203:1">Angang Steel Co Ltd (H) (347 HK)</a> price target remains HK$6.50, but the timing of the correction is likely delayed into 4Q18. 
RECENT NEWS-FLOW MORE SUPPORTIVE…:  <a href="https://www.smartkarma.com/entities/203" target="_blank">Angang </a>shares…

INVESTMENT VIEW: Despite having pushed out the timing on our call for a meaningful correction in steel prices, we remain Cautious on the outlook for Chinese steel earnings and Angang shares into 2019.  In addition, we see a number of headwinds, beyond pricing, challenging the sustainability in peak-of-cycle earnings.  Our Angang Steel Co Ltd (H) (347 HK) price target remains HK$6.50, but the timing of the correction is likely delayed into 4Q18. 
RECENT NEWS-FLOW MORE SUPPORTIVE…:  Angang shares…

Policy Easing Pushes Out Our Correction Call, But Headwinds to Return into FY19

CHINA - Healthcare, Steel, Autos, Education, Research From Beijing

Scott Laprise/ 乐天虎

CHINA - Healthcare, Steel, Autos, Education

Maanshan Iron & Steel H / Equity Bottom-Up

<ul><li>This is our new monthly series to look at steel demand as a proxy for the Chinese economy.</li><li>We look at steel inventories and how they have changed since our last visit We look at steel prices in China and how they have changed.</li><li>We explain why the newsflow on steel is wrong and why you need to read our monthly on the ground steel reports.</li><li>We found very different activity this year compared to any other post-Chinese New Year.</li><li>We will give you our views on the stocks and what we see actually on the ground which is very different than what investors are reading in the news.</li></ul>

This is our new monthly series to look at steel demand as a proxy for the Chinese economy.We look at steel inventories and how they have changed since our last visit We look at steel prices in China and how they have changed.We explain why the newsflow on steel is wrong and why you need to read our monthly on the ground steel reports.We found very different activity this year compared to any other post-Chinese New Year.We will give you our views on the stocks and what we see actually on the ground which is very different than what investors are reading in the news.

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

After meeting with steel and aluminum executives at the White House on March 1, President Donald Trump announced that he'll be enacting a 25% steel tariff next week. It is unclear, however, if this approach will be applied in a blanket fashion to all countries or only to a targeted list of countries. In its Feb. 16 Section 232 report, the blanket tariffs proposed by the U.S. Department of Commerce were 24% for all steel imports, which is less severe than the figures indicated by Trump on March…

After meeting with steel and aluminum executives at the White House on March 1, President Donald Trump announced that he'll be enacting a 25% steel tariff next week. It is unclear, however, if this approach will be applied in a blanket fashion to all countries or only to a targeted list of countries. In its Feb. 16 Section 232 report, the blanket tariffs proposed by the U.S. Department of Commerce were 24% for all steel imports, which is less severe than the figures indicated by Trump on March…

Minimal Impact on Our Asian Steel Coverage Following U.S.Steel Import Tariffs; FVEs Unchanged

China

China Hongqiao Group Ltd. manufactures aluminum products. The Company's aluminum products consist of molten aluminum alloy, aluminum alloy ingots and aluminum busbars.

Zhongjin Gold Corp Ltd acquires, explores and develops properties for gold production. The Company's products also include silver, electrolytic copper and sulphuric acid.

Aluminum Corporation of China Limited, also known as Chalco, is a producer of alumina and primary aluminum in China. The Company refines bauxite into alumina and smelts alumina to produce primary aluminum.

Inner Mongolian Baotou Steel Union Co., Ltd. smelts and processes ferrous metal products.  The Company's products include plates, seamless metal tubes, heavy tubes, square steel, wire rods, steel pipes, steel scraps, and other related products.

Inner Mongolia Baotou Steel Union (600010 CH)

China Northern Rare Earth Group High-Tech Co. Ltd. is the consolidation of mining, smelting, separation and utilization companies in the northern region of Inner Mongolia.

China Northern Rare Earth Group High-Tech (600111 CH)

China Northern Rare Earth Group High-Tech

Jiangxi Copper Company Ltd. operates in the copper mining, milling, smelting and refining to produce copper cathode and other related products, including pyrite concentrates, sulphuric acid and electrolytic gold and silver businesses.  The Company also provides smelting and refining services pursuant to tolling arrangements for customers.

Jiangxi Ganfeng Lithium Co., Ltd. researches and produces lithium products and operates import, export and manufacturing businesses for its own products.  The Company's products include lithium metal, lithium aluminum hydride, lithium fluoride, lithium chloride, and other chemical products of lithium.

Citic Pacific Special Steel Group Co., Ltd. manufactures and markets a variety of steel products including spring steel, ball steel, mold steel, and other related products.

Citic Pacific Special Steel Group Co., Ltd. (000708 CH)

Citic Pacific Special Steel Group Co., Ltd.

Shandong Gold Mining Co., Ltd. operates gold mining and production businesses. The Company provides gold exploration, processing, and outsourcing gold smelting services. Shandong Gold Mining also conducts gold jewelry purification and non-ferrous metal production businesses.

CMOC Group Limited operates as a mineral mining and exploration company. The Company focuses on non-ferrous metal mining. CMOC Group specializes in mining and trading of base and rare metals.

United States Steel Corporation operates as an integrated steel producer. The Company manufactures flat-rolled and tubular products with production operations in North America and Europe. United States Steel serves the automotive, appliance, container, industrial machinery, construction, and oil and gas industries.

POSCO Holdings Inc. manufactures and distributes steel products. The Company produces crude steel, hot rolled steel, cold rolled steel, stainless steel, steel plates, wire rods, galvanized steel, electrical steel, and other related products. POSCO Holdings markets its products worldwide.

JFE Holdings, Inc. is a holding company which was established through the merger of NKK Corp and Kawasaki Steel Corp.  The Company manages and conducts its subsidiaries' business, which is steel production and integrated engineering services.

Vedanta Limited mines, produces, and exports base metals. The Company mines and distributes metals such as zinc, iron ore, copper, silver, and aluminium, as well as operates power plants. Vedanta markets its products worldwide.

Newcrest Mining Limited is a gold mining, exploration and production company. The Company is geographically focused in Australia, the Pacific region and Asia. Newcrest Mining operates projects within six provinces in four countries, focusing on the Cadia East and Lihir MOPU expansion projects and the Wafi Golpu and Namosi greenfield projects.

Nippon Steel Corp is an integrated steel maker. The Company produces various types of steel products used for industrial machinery & equipment and exports them worldwide.  Nippon Steel provides plant construction and urban development and also develops new businesses such as chemicals, ceramics, electronic equipment and information & communication systems.

China Steel Corporation manufactures and markets a variety of steel products. The main products are hot rolled coils and sheets, cold rolled coils and sheets, wire rods, steel plates, and steel bars.

NMDC Limited explores for minerals. The Company is exploring for iron ore, copper, rock phosphate, lime stone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, and beach sands.

Northern Star Resources Ltd manufactures precious metals. The Company provides mining and production of gold. Northern Star Resources serves customers in Australia and North America.

Hoa Phat Group JSC is a multi-disciplinary manufacturing company. The Company manufactures a wide range of products, including steel, steel pipe, furniture, and refrigeration equipment.

Baoshan Iron & Steel Co., Ltd. manufactures and markets a variety of iron and steel products including cold rolled plates and coils, hot rolled plates and coils, seamless steel tubes, high-speed wire rods, and steel billets.  The company also operates in related energy production businesses.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Baoshan Iron & Steel Co A (600019 CH)

Angang Steel: PMI Recovery to Support Shares: Close Short

INVESTMENT VIEW:The recovery in China’s March PMI index to 50.8 shows an unexpected expansion in economic activity. Historically, there is a...

Charles Spencer

Angang Steel: More Pain Ahead on Chinese Steel Overproduction. PT Cut to HK$5

We believe overproduction and lower steel prices into 1H19 will lead to material downward revisions in Angang’s NTM EBITDA forecasts and its stock...

Charles Spencer

Policy Easing Pushes Out Our Correction Call, But Headwinds to Return into FY19

INVESTMENT VIEW:Despite having pushed out the timing on our call for a meaningful correction in steel prices, we remain Cautious on the outlook for...

Charles Spencer

CHINA Steel Trader Visit - 3rd Visit

This is our new monthly series to look at steel demand as a proxy for the Chinese economy. We look at steel inventories and how they have changed...

Scott Laprise/ 乐天虎

Minimal Impact on Our Asian Steel Coverage Following U.S.Steel Import Tariffs; FVEs Unchanged

After meeting with steel and aluminum executives at the White House on March 1, President Donald Trump announced that he'll be enacting a 25% steel...

Morningstar, Inc.

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)