In the second half of 2011, tungsten prices entered the downtrend channel and the recent decline accelerated. After the tungsten price reached its highest point in mid-2011, it gradually went down. The rate of decline has accelerated recently. In July 2012, the price of tungsten concentrate decreased from 123 million yuan/ton (including tax) at the beginning of the month to 11.25 million yuan/ton (including tax) at the end of the month, and rapidly decreased by 9% in one month, bringing the profits of many tungsten enterprises. Pressure, we believe that the decline in the share price of Xiamen Tungsten and Zhangyuan Tungsten is also related to this. Insufficient production reduction, tungsten concentrate production still maintained steady growth. Most domestic tungsten concentrate production costs are concentrated at 50,000-80,000 yuan/ton. Therefore, most enterprises still have profit margins under the tungsten price level of 96,000 yuan/ton (excluding tax), and the production power is insufficient. From the monthly statistics, tungsten concentrate production still maintains steady growth. Historically, the average growth rate of tungsten concentrate production is around 10%. On the demand side, the overall situation is more pessimistic. The cumulative sales revenue, cost, and export growth rate of cutting tools are all declining, but it is likely that the single-month value is already beginning to show negative growth. This may be the trigger for the rapid decline in tungsten prices in the second quarter. For the prospect of tungsten prices, industry experts generally believe that there is no reason for optimism. In the context of insufficient production of mines, the price of tungsten is largely determined by the demand side. Since the cutting tools downstream of tungsten are used in traditional industries, the demand trend of tungsten is basically the same as that of China, including overseas. But at present, the momentum of China's economic downturn has not yet turned around. The European recession may be a long-term process, and the demand for tungsten is still on a downward trajectory. Â Â Â Â Â Â The Xiamen Tungsten Industry, which is consistently optimistic about the capital market, has recently experienced a rapid stock price correction. We believe that the reasons for the callback include: (1) valuation pressure. Because if the tungsten price and the price of rare earth continue to be sluggish in the second half of the year, then the annual EPS of Xiamen Tungsten Industry is estimated to be only 0.7 yuan (excluding real estate), then the stock price corresponding to 37 yuan is much higher than the average of the color. (2) Insufficient confidence in the economic outlook. However, aside from the macro factors, the management and development prospects of Xiamen Tungsten itself are still worthy of optimism. The expected benefits in the future include the integration of upstream rare earth and tungsten, and the breakthrough of deep processing projects such as downstream NdFeB. We believe that when the stock price falls back to the platform of 30 yuan from the platform of 40 yuan, the buying opportunity may gradually appear. Future investment opportunities include tungsten production, tungsten storage, economic bottoming and so on. After three years of adjustment, the Chinese stock market is waiting for the opening of a new economic cycle.Over Bed Table
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