CITIC SEC: Performance growth accelerates significantly, metal market outlook remains promising.

CITIC SEC released a research report stating that the performance of the metal industry is generally accelerating in the first quarter of 2025 and 2026. Tungsten, lithium, lead-zinc, and rare earth magnetic materials are leading the way, while aluminum, copper, nickel, cobalt, tin, antimony, and gold have shown weak performance since the beginning of the year. Currently, the valuation of the metal sector is still at a reasonable level, with aluminum, copper, nickel, cobalt, tin, antimony, and gold valuations relatively low, indicating potential for valuation growth. Dividends in the industry have slightly declined, but some individual stocks still have a forecasted dividend yield of over 5%. Looking ahead to 2026, with easing liquidity shocks, frequent supply disruptions, and continued high prosperity in certain downstream areas, it is recommended to focus on opportunities in the lithium, copper, rare earth, strategic metals, aluminum, and gold sectors. Key points from CITIC SEC include: Market review: The metal industry has significantly outperformed the market since 2025, with tungsten and lithium showing strong performance in 2026 In 2025 and the beginning of 2026 (as of April 30), the CITIC Nonferrous Metal Index rose by 98.6%/10.4%, outperforming the CSI 300 Index by 77.4/8.5 percentage points and ranking 2nd and 7th in terms of price changes among 30 industries. In 2025, tungsten, nickel, cobalt, tin, antimony, copper, lithium, lead-zinc led the way with increases of 146%/130%/118%/94%/92%/ over 60%. In 2026, tungsten, lithium, other rare metals, and lead-zinc increased by 74%/38%/32%/23%, with rare earth magnetic materials, gold, nickel, cobalt, tin, aluminum, and copper increasing by 16%/10%/9%/3%, with copper showing a decline of 5.0%, indicating weak performance. Performance and valuation analysis: Performance growth has accelerated significantly, while valuations remain reasonable In 2025, the non-ferrous metal industry saw a year-on-year revenue increase of 15.5%, with consolidated net profit increasing by 56.5%, reaching a new high for seven consecutive years. In the first quarter of 2026, the sector's revenue and consolidated net profit increased by 37.6% and 111.0% year-on-year, respectively, showing a significant acceleration in growth. In terms of specific sectors, rare earth magnetic materials, gold, aluminum, tungsten, copper, nickel, cobalt, antimony, and lead-zinc outperformed, with consolidated net profits in 2025 increasing by over 150%/67%/51%/46%/41%/34%/33% respectively, and in the first quarter of 2026, with tungsten, aluminum, nickel, cobalt, tin, antimony, gold, lead-zinc, and copper seeing consolidated net profit growth of 301%/131%/117%/108%/83%/78%, while the lithium sector returned to profit. As of April 30, 2026, the 2026 Wind consensus P/E ratio for the non-ferrous metal sector was 15.2 times, which is still lower than the industry average of 21.6 times, with a rolling P/E of 16.3 times and a rolling P/B of 2.8 times, all at historically low levels. Within specific sectors, valuations for aluminum, copper, nickel, cobalt, tin, antimony, and gold are relatively lower, with 2026 Wind consensus P/E ratios of 10.9/12.4/16.4/16.4, respectively. Holdings and dividend analysis: Fund holdings are leading the market, with industry dividend returns slightly declining As of the end of the first quarter of 2026, the market value of fund holdings in the non-ferrous metal industry was 263.3 billion yuan, ranking 5th among all industries with a holding value proportion of 3.27% of the total stock investment market value, a decrease of 0.08 percentage points from the end of 2025. At the end of 2025, the industrial metal/precious metal/rare metal sector holding ratios were 3.9%/0.9%/0.8%, respectively, with increases of +1.7/+0.4/+0.9 percentage points compared to the end of 2024, showing a high allocation status. The overall dividend ratio in the non-ferrous industry in 2025 was 33.8%, a slight decrease of 0.9 percentage points from 34.7% in 2024; compared to all A-shares, the gap widened from 4.7 to 5.4 percentage points, with an industry dividend yield of 1.34%, down 0.80 percentage points from 2.14% in 2024. Risk factors: Risk of a significant drop in metal prices; Risk of domestic economic recovery falling short of expectations; Risk of overseas economic recession; Risk of the extent of the Fed's rate cut falling short of expectations; Risk of upstream supply growth exceeding expectations; Risk of operational risks from overseas assets of enterprises; Risk of new capacity construction progress falling short of expectations; Risk of industry policy changes exceeding expectations; Risk of more severe safety and environmental protection situations than expected.