Sinolink: The period from August to September is expected to become the main window for the repair of copper stocks' mispricing. The probability of a strong price increase around Q4 is further increasing.

Sinolink releases a research report stating that currently copper stocks are in a combination stage of "low PE, high EPS resilience, and unrefuted commodities". The market is still pricing copper stocks based on the macro valuation framework of the past decade, but the current non-ferrous sector has entered an EPS-driven cycle, and the reassessment of the profit potential and resource value of the copper sector has not yet ended. Sinolink believes that August and September are likely to become the main window for the correction of undervalued copper stocks, increasing the probability of a strong price rise around Q4. It is recommended to focus on copper resource companies with high copper production, outstanding cost advantages, high sensitivity of performance to copper prices, and low valuations. Sinolink's main points are as follows: Switching pricing methods: EPS-driven copper stock pricing, PE compression amplifies mispricing The main reason for the current copper stock correction comes from mispricing on the valuation side, while the profit side and the commodity side have not yet confirmed a downturn. In the past decade, non-ferrous stocks were priced more based on PE, with macro, interest rates, and risk preferences driving sector fluctuations; since 2021, profit centers of resource companies have been raised, and the copper sector has entered an EPS-driven stage. The current market is still trading based on the old cycle framework of rate hikes and risk preferences, leading to copper stocks being pushed to historical lows in PE, but EPS is still growing compared to the end of 2025, with stock declines diverging significantly from profit changes. Is stock pricing correct: current copper stocks are already trading excessively pessimistically Copper stocks have been excessively trading on pessimistic expectations of "copper price peak + profit downgrades + continuing valuation compression". Historical analysis shows that copper stocks can lead the peak of copper prices, but the conventional leading window is about 40-100 days, with a median of about 80 days; after the copper stock peak on January 29, copper prices have not yet confirmed a downturn, and both the commodity side and profit expectations have not weakened systematically. The current decline in copper stocks is closer to the overshooting of equity to macro and risk preferences. When will pricing errors be corrected: August and September are the main windows, no later than Q4 The correction window for mispricing is expected to fall in August and September, no later than Q4. Historical data from 8 rounds of copper stock mispricing samples show that the quickest time from the low point to recovery was 7 days, with a typical range of about 36-55 days, with most completed within 1-2 months, and the slowest about 148 days. If copper prices remain high or oscillate up again, market concerns about "peak copper prices, profit downgrades" will gradually ease, and the basis for the valuation repair of copper stocks is already in place. Correction catalyst: this round of catalyst may come from a strong price rise This round of correction catalyst may come from a strong price rise. Historically, the recovery of copper stocks after mispricing can be classified into three categories: replenishing risk preferences, stabilizing commodity recovery, and strong commodity catalysts, with the latter having the greatest elasticity. Currently, disruptions in the supply of minerals and insufficient capital expenditure constrain supply, smelting and processing fees remain low, smelters are under pressure, and inventories continue to decline. If smelter inventories hit bottom in Q4 and trigger passive production cuts, copper prices are expected to break through the high-level platform, driving copper stocks from valuation repair to resonance market where EPS is upgraded and PE is replenished. Risk warning Unexpected rate hikes or tightening liquidity by the Federal Reserve; global manufacturing demand lower than expected; significant drop in copper prices; mineral supply recovery higher than expected; smelting production cuts lower than expected; slow inventory depletion than expected; deviation between calculated assumptions and actual situation.