北美金属与采矿业：未来的通胀尚未发生.docx

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1、CORENorthAmericaMetals&MiningUPDATE:Inflationaryboomahead?EARNINGSPREVIEWEquityResearch20July2020NotyetThisupdatecorrectsQ2/20EPSandEBITDAestimatesinFigure51.Thisnotereplacestheoriginalversionreleased20-July-20,04:10GMT.Recovery,atacost.AsidefromCovid-19,thedominantmacrothemeofQ2/20wastheun

2、precedentedmonetaryandfiscalsupportwhichhaskepttheglobaleconomyonitsfeetanddrivenupassetprices,evenasvirusgrowthcontinuestoaccelerateglobally.Consensusappearstobethattheworldisheadedforaslowandsteadyrecovery,andmarketsandcommoditiesareupasinvestorsresumethechaseforyield.Thestrengthoftherecove

3、ryinChinahashelpedtocompressriskpremiainemergingmarketsandtheUSDhasweakened.Commoditypriceforecastsmodestlytweaked.Soisthisthestartofaninflationaryboom?Mostlikelynot(yet).Riskstotheglobaleconomyremain,andweareholdingbackfromanoverlybullishcommoditypricedeck.Wehavemarkedpricestomarketbutgenera

4、llyanticipatemeanreversionwithgoldandcopperhavingdownsideonslightlyhigherrealratesandmodestoversupplyrespectively,whilemetcoalandzinccouldhaveupsideasthesteelindustryrampsup.LookingthroughQ2.WehaveupdatedourQ2earningsestimatesfortheminersandstreamers.Giventheinterruptionstoactivityduringthequ

5、arter,wethinkinvestorswillbemorefocusedonanychangestooutlooksvsexpectationsratherthanactualoperatingperformance.Weexpectprojectcapexschedulestohaveslipped,andthefocuswillremainonH2/20freecashflowpotential.Q2costsarelikelytobesomewhatelevated,includingstockbasedcompgivenQ2sharepricerecoveries.

6、Basemetalproducersshouldbenefitfromsignificantprovisionalpriceadjustments.Miningequityvaluationselevated;targetsraised~16%,downgradingFCXandFMtoEWandWPMtoUW.Minersandthebroadermarkethaveseenmultiplesinflateasinvestorslookforyield.WeareboostingourP/NAVtargetmultiplesbyanaverageof10%.Asaresult,

7、stocktargetsforourcoverageareupbyanaverageof16%.However,anumberofnamesappeartohavereachedfairvalue,andthestreamersstandoutasparticularlyexpensive.WithinsufficientreturntotargetforFMandFCX,wedowngradetoEqualWeight.Bothcompanieshaveanattractive