After more than a month of “high-low switching”, A-Shares returned to the sector rotation pattern this week. On the disk yesterday, the new energy sector with large adjustment in the early stage recovered as a whole, and the varieties of lithium resources in the upstream strengthened significantly; The infrastructure sector, which had led the rise, adjusted, and the early hot varieties such as tourism also fell ahead.
As of yesterday’s close, the Shanghai composite index reported 3468.04 points, up 0.06%; The Shenzhen Component Index rose 0.35% and the gem index rose 0.76%. The total turnover of Shanghai and Shenzhen stock markets was 908.799 billion yuan, which continued to be at a low level in the past six months.
Under the background of unclear market main line in the near future, funds tend to trade in sectors with favorable support. There was a significant change in the lithium resources sector yesterday. The lithium mine index closed up by nearly 7%, the harvest limit of Tianqi Lithium Corporation(002466) , Sinomine Resource Group Co.Ltd(002738) , Yongxing Special Materials Technology Co.Ltd(002756) , Ganfeng Lithium Co.Ltd(002460) , Qinghai Salt Lake Industry Co.Ltd(000792) and so on rose by more than 6%.
On the news side, the price of lithium carbonate is still hitting a new high. According to the data of Shanghai Nonferrous Metals network, the average spot price of domestic battery grade lithium carbonate has been rising all the way recently. After jumping 10000 yuan for three consecutive trading days, the average price of lithium carbonate rose 8000 yuan again yesterday, with the latest report of 430000 yuan / ton.
Listed companies also continue to make efforts to layout lithium resources. On February 16, Sichuan Yahua Industrial Group Co.Ltd(002497) disclosed that Australian core company expected to provide lithium concentrate for the company in the fourth quarter of this year according to the agreement. According to the previous agreement, Yahua international, a wholly-owned subsidiary of Sichuan Yahua Industrial Group Co.Ltd(002497) , will purchase at least 75000 dry tons (no more than 10% up and down) of lithium oxide concentrate from a wholly-owned subsidiary of core every year.
Although the price of lithium resources remains high, the share prices of relevant companies have experienced significant adjustments since the beginning of the year. The lithium mine index has retreated by 20% this year, more than 35% compared with the peak in September last year. The deviation between spot lithium price and stock trend has triggered heated discussion in the industry.
Guotai Junan Securities Co.Ltd(601211) the nonferrous metals team believes that the recent deviation of lithium price from the trend of the sector is mainly due to the continued rapid rise of lithium price after breaking through the historical high, which has triggered the concern of cyclical investors about the future price (Sustainability) and deeply deduced to the concern about demand (being suppressed), Thus, the valuation system of the sector is switched from “growth overestimation” to “cyclical underestimation”.
In Guotai Junan Securities Co.Ltd(601211) view, lithium prices continue to reach new highs and show long-term sustainability at high prices, which is behind the rigid supply shortage caused by the rapid development of demand in downstream industries. Reflected in the fundamentals of listed companies, the high growth of corporate profits and the sustainability of high profits will reverse the industry’s general understanding of lithium’s “traditional cyclical products”, so as to give the sector higher valuation space.
In terms of future outlook, a number of securities companies have recently released their strategic outlook for the spring of 2022, some of which deserve attention.
China Securities Co.Ltd(601066) Chen Guo, chief strategy officer, said in the spring report that the profit growth of A-share enterprises in 2022 is expected to be significantly slower than that in 2021. Under the background of downward profit cycle, the sector with upward performance against the trend has stronger risk resistance. From the perspective of marginal changes in profit, the marginal improvement of food and beverage, electric power, infrastructure and other sectors is obvious; From the perspective of industry cycle, the boom improvement of smart car, food and animal husbandry industries is expected to be strong.
Mou Yiling, chief strategist of Minsheng securities, continues to be optimistic about the value style and believes that the valuation of Chinese value stocks is at a low level in the world. At the same time, from the perspective of incremental funds, the preference for “fixed income +” funds brought by financial net worth is different from that of stock public funds, which has reflected the preference for finance and cyclical industries.
