Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Commodity Conference Note
Stock plays on our bullish commodities
theme
Global macroeconomic picture is strong for 2011
Macquarie Economics expects 2011 to be a strong year for global economic
growth, with world GDP forecast to reach at least 4.2%. The US economy should
be a particular standout. Macquarie expects it to show robust reacceleration in
2011, with real GDP growth of at least 3.5%. Strong momentum heading into the
New Year, very loose monetary policy and late fiscal stimulus should be powerful
catalysts. In our view, this strong growth outlook creates a very favourable
environment for risk assets, including commodities.
Bullish stance on crude oil prices stays put – recommend
HAL, APA, PXD, WNR and XOM
Jan Stuart, our Global oil economist, states that oil demand is growing fast and
that what was a recovery period in 2009–10 is already turning to outright strength
in 2011. The continued rebound in OECD economies adds upside risk to our
forecast for Brent to average US$99/b in 1H11. Recent unrest in Northern Africa
serves as a further reminder of the link between geopolitical risk and crude prices.
Within the oil and gas sector, our recommendations are oil leveraged. These
stocks either directly benefit through higher crude oil price realizations (APA, PXD
and XOM) or indirectly when oil-leveraged E&Ps boost their capital spending
domestically and internationally (HAL). They also benefit from a pickup in crude oil
demand that should boost refining utilization and margins (WNR).
Recent sell-off in large-cap gold stocks presents buying
opportunity
Gold prices at the moment appear to be leading the commodity complex lower. As
concerns rise about inflation in Asia, sovereign risk in Europe and growth in the
United States, we expect gold to decouple from industrial commodities and
recommend investors to add to positions in the group, particularly among the
large caps (ABX CN, G CN).
Bullish on met coal and iron ore markets: recommend WLT,
VALE and TCK
The already-tight seaborne met coal market has been severely affected by La
Niña since late December, and this has pushed hard-coking coal spot prices to
close to US$400/ton. We do not see supply dynamics getting any better until
2H11. Also, no new seaborne iron ore supply is coming online until 2013, and
Chinese high-cost supply remains the marginal supplier, providing price support.
Within the metals and mining space, we recommend TCK, WLT and VALE. TCK
has unmatched exposure to premium quality coking coal (55%) and copper
(35%). Coal production of 26m tonnes in 2011 is from six open-pit, low-risk
operations with brownfield expansions to 28m tonnes by 2012. The ANR/MEE
transaction of 6.8x EV/EBITDA implies C$89/sh for TCK. Our target is C$92.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Commodity Conference Note
Stock plays on our bullish commodities
theme
Global macroeconomic picture is strong for 2011
Macquarie Economics expects 2011 to be a strong year for global economic
growth, with world GDP forecast to reach at least 4.2%. The US economy should
be a particular standout. Macquarie expects it to show robust reacceleration in
2011, with real GDP growth of at least 3.5%. Strong momentum heading into the
New Year, very loose monetary policy and late fiscal stimulus should be powerful
catalysts. In our view, this strong growth outlook creates a very favourable
environment for risk assets, including commodities.
Bullish stance on crude oil prices stays put – recommend
HAL, APA, PXD, WNR and XOM
Jan Stuart, our Global oil economist, states that oil demand is growing fast and
that what was a recovery period in 2009–10 is already turning to outright strength
in 2011. The continued rebound in OECD economies adds upside risk to our
forecast for Brent to average US$99/b in 1H11. Recent unrest in Northern Africa
serves as a further reminder of the link between geopolitical risk and crude prices.
Within the oil and gas sector, our recommendations are oil leveraged. These
stocks either directly benefit through higher crude oil price realizations (APA, PXD
and XOM) or indirectly when oil-leveraged E&Ps boost their capital spending
domestically and internationally (HAL). They also benefit from a pickup in crude oil
demand that should boost refining utilization and margins (WNR).
Recent sell-off in large-cap gold stocks presents buying
opportunity
Gold prices at the moment appear to be leading the commodity complex lower. As
concerns rise about inflation in Asia, sovereign risk in Europe and growth in the
United States, we expect gold to decouple from industrial commodities and
recommend investors to add to positions in the group, particularly among the
large caps (ABX CN, G CN).
Bullish on met coal and iron ore markets: recommend WLT,
VALE and TCK
The already-tight seaborne met coal market has been severely affected by La
Niña since late December, and this has pushed hard-coking coal spot prices to
close to US$400/ton. We do not see supply dynamics getting any better until
2H11. Also, no new seaborne iron ore supply is coming online until 2013, and
Chinese high-cost supply remains the marginal supplier, providing price support.
Within the metals and mining space, we recommend TCK, WLT and VALE. TCK
has unmatched exposure to premium quality coking coal (55%) and copper
(35%). Coal production of 26m tonnes in 2011 is from six open-pit, low-risk
operations with brownfield expansions to 28m tonnes by 2012. The ANR/MEE
transaction of 6.8x EV/EBITDA implies C$89/sh for TCK. Our target is C$92.
No comments:
Post a Comment