Commodity and Cyclical Plays


(Mehnazfatima) #184

Guys…I would like to draw your attention to copper prices in India…they seem to be in an uptrend but that is not yet getting reflected in the prices of copper stocks…

I am posting the quarterly chart of Copper 1 contract on MCX…its now @ 450 and appears to be in an uptrend. In the next few quarters…may be in a year or 18 months…or even two years, this can go upto 650+…Insofar as commodity prices are concerned, its a big jump. Any price rise adds directly to the bottom line of copper producers…Hind Copper / VEDL. Just have a look at the chart.

It is axiomatic in cyclical investing that even a moderate rise in commodity prices cause an exponential rise in prices of commodity producing stocks. Looks like we are in the initial stages of the turnaround in copper cycle. Those who get on early in the cycle, reap the most benefits. Valuepickr guidelines discourage me from posting price targets for Hind Copper…it is sufficient to say that in case the turnaround in copper cycle does happen as I anticipate, those investing in Hind Copper will have a lot of reason to smile.

Discl…Holding Hind Copper


(Mehnazfatima) #185

Also pl refer to my note dated jan 2017…Contrarian investing using technical analysis

wherein I pointed out the signs of cyclical turnaround in steel sector …more particularly SAIL @ 49…it now appears that there is indeed a turnaround in steel cycle.

Even Pipemakers too have done well…man industries @45…Jindal saw @55…both have risen by more than 100%Contrarian investing using technical analysis

Cyclical investing at the bottom of downcycle is mostly a game of technical analysis…or maybe you need to be as perceptive as Jiten parmar::slightly_smiling_face:


(Amit) #186

I am invested in hind copper. Copper prices have some runway further and I have a feeling that it may touch 2012 high though I could be wrong. Yesterday we have seen the UC yday in HindCopper. It may continue its journey even further. This EV push will bring huge demand for Cobalt, Nickle and Copper. Typically one Vehicle would need cobalt from 5 kgs to 15kgs. Hind Copper is a long term bet on copper and Nickle. Hind Copper has pricing power on copper and Nickle at the moment which could improve its margins even further.

Disc: Holding HindCopper and Largest cobalt producer in developed world (Australia) Ardea Resources in ASX.


(Jiten Parmar) #187

@Mehnazfatima Appreciate your views on the thread. Plz do post charts of different commodities you track more often. They can help.

Hind Copper was bought by LIC yesterday. Very surprising. Something is cooking. I had sold 10% after sharp runup. But now I intend to hold on to the remaining 90%. It also mines nickel. And nickel story can be big. We need to find any other nickel miners too. If anyone have any idea on that, please share.


(Jiten Parmar) #188

@aammiitt2 Good inputs.


(reddygvsb) #189

If you wish to check what are the mineral resources and who are the miners of a particular mineral in India etc, the Indian Minerals Year Book that Indian Bureau of Mines brings out is a good source. For example: Look up this link - http://ibm.nic.in/index.php?c=pages&m=index&id=883

The 2016 Version is still being updated. So, you may want to check the earlier editions. The changes in these details won’t be too radical. For the prices etc, you will, of course, have to look elsewhere. Even IBM has some price data, but that is not very reliable.


(Raj A A) #190

Hind Copper is planning expansion thro debt route.


(Amit) #191

#HindCopper and Copper Investment Thesis

  • Capacity expansion - 3x to 5x times
  • Electric Vehicle
    *Renewables
    *Consumer Electronics
    *Copper coefficient for solar capacity is 2½ times the one for coal capacity. Coal generation facilities contain about 2kgs of copper per KW; solar requires about 5kgs

http://www.bhp.com/media-and-insights/reports-and-presentations/2017/11/coppers-time-has-come

Stay invested!


(khushi) #192

i think one can start accumulating Hindustan copper from these levels and as the price falls to 80 - 70 more can be added.

It will be fruitful in next 3 - 5 years…

Just one thing i cant understand is that Book Value is around Rs. 15 and P/E is over 100…

Being a PSU how come such a high P/E possible ???

Seniors comment please.


(Amit) #193

There will be a supply deficit in 2017 and 2018. All this talk about smart cities, EV, Infra will not be achievable if HindCopper does not invest in Capacity expansion. Infact Govt is looking to auction copper mines in next 2 years to spur supply situation.

Look at https://in.reuters.com/article/india-mining/india-to-auction-coper-mines-over-next-two-years-idINKBN1D80HW

image

Hind Copper will not look for Expansion if results on Nov 10 will not be good. Gut feel could be wrong.

#ElectricCar production could boost global #copper #demand by 50% in the next 18 yrs, according to BHP


(keda) #194

which other companies can benefit from copper upcycle


(Amit) #195

(Dhananjay) #196

(Amit) #197

PBT gone up 3.7 times yoy. Wow results thanks to boom in commodity prices. Bottom line has swelled due to increasing copper prices. Revenue is decent too.

#HindCopper Results

Revenue up 26.4% qoq
Revenue up 153.5% yoy

PAT increase 200% qoq
PAT increase 274% yoy

EPS increased 1.8 times qoq
EPS increased 3.21 times yoy :pray:

Disc: core holding


(aarshkshah1992) #198

There’s a lot of interest in copper among hedge funds and traders with some even heralding the golden age of copper

https://www.ft.com/content/9dea89fc-ba39-11e7-9bfb-4a9c83ffa852

The important question however is about valuation. Is there a way to find out the actual valuation of HInd Copper based on copper prices or this simply a momentum play ? Another problem with the management is transparency. Why don’t they conduct conf calls ? Even their annual report is nothing much to look at . Any thoughts ?

Disclosure : Invested.


(aarshkshah1992) #199

Should we look at starting a separate thread for HIndustan Copper given it’s long term prospects ?


(shreys) #200

Sure. That seems like a decent proposition. It’ll make it easier for potential investors to access information pertaining to the company.


(aarshkshah1992) #201

Could we be staring at one of the fiercest copper rally ever ?

First three lines of the article

Summary

Huge winners and huge losers will be created. It’s going to be one of strongest financial tailwinds we’ll see in our lifetime.

Copper has become a great way to invest in the green energy super-trend. I believe it can make us a great deal of money over the next five years.

To fully understand the upside potential copper mining stocks have right now, we need to quickly cover where the copper market has been, and where it’s going.


(shreys) #202

In my understanding, a major portion of the global copper production is utilised in the electronics and telecommunications industry. If copper does see a significant upward movement in its price, can’t manufacturers use aluminum instead of copper?
Also,copper consumption in China is a great indicator of consumption worldwide. There’s no significant increase in copper usage in China. What exactly could trigger the hike in prices? Demand is expected to remain stable and so is supply. Please correct me if I’m wrong.


(aarshkshah1992) #203

Read the article posted above. Major points

1.) No significant copper mine has been discovered in the past decade.

2.) Costs of producing copper are increasing because of low availability of cheap electricity in the key copper producing regions

3.) The Chinese have begun stockpiling more and more copper. The copper stored in the Shanghai metal exchange is now more than that stored in the London stock exchange.The last time this happened was in 2005. Look at the copper prices back then. The chinese are good at anticipating their own copper demand and future prices. They want to buy it now when it’s still relatively cheap.

4.) Solar panels need copper, wind turbines need copper, ev’s need copper, infrastructure needs copper. Vedanta is planning to double it’s copper smelting capacity to meet anticipated demand,

5.) One of the world’s largest copper producers in the world, Codelco, is predicting that copper will touch 10000$ from the current 7000$

6.) Look the profits of copper mining companies in Chile, USA and Australia for this quarter . They have gone up humongously, much like Hind copper today .

Disclosure : Invested.