According to the Zhitong Finance APP, CITIC Securities released a research report stating that in the first half of 2025, the profit growth rate of the metal sector will further rise, and the sector will maintain strong performance. Among the sub-sectors, rare earths, tungsten, nickel, cobalt, tin, antimony, and copper have performed excellently. The dividends and fund holdings in the metal sector are also on the rise. The continuous increase in the sector has driven the valuation level to a high since 2022, but there is still room to reach the 2021 peak, with sub-varieties such as aluminum, lithium, and nickel, cobalt, tin, and antimony showing significant undervaluation advantages. Looking ahead, the bank is optimistic about gold prices reaching new highs after interest rate cuts, and copper prices are expected to benefit from strong fundamentals and continue to rise. Supply disruptions catalyze bottom opportunities for battery metals, and the strategic value of rare earths and tungsten remains prominent, while the profitability and valuation of the aluminum sector are expected to resonate upwards. Additionally, it is recommended to pay attention to materials related to solid-state batteries and AI servers.

CITIC Securities' main viewpoints are as follows:

Market Review: The metal market has risen across the board, with rare metals such as rare earths and tungsten performing prominently.

Since the beginning of 2025, the CITIC Nonferrous Metals Index has risen by 52.5%, outperforming the CSI 300 Index by 34.8 percentage points; from the second quarter to date (as of August 29, the same below), the CITIC Nonferrous Metals Index has risen by 35.8%, outperforming the CSI 300 Index by 20.1 percentage points. The metal sector's performance ranks second across all industries since the beginning of 2025. In terms of sub-sectors, the rare earth magnetic materials, tungsten, and nickel, cobalt, tin, and antimony indices performed the best, rising 123%, 91%, and 67% respectively since the beginning of 2025, while copper and gold rose by 53% and 43%, respectively. The aluminum and lithium sectors had lower increases, at 31% and 22%, respectively.

Performance and Valuation Analysis: The profit growth rate of the metal industry is rising, with aluminum, lithium, and nickel, cobalt, tin, and antimony sectors having low valuations.

In the first half of 2025, the overall revenue of the nonferrous metal industry grew by 6.7% year-on-year, and the net profit attributable to the parent company grew by 37.5% year-on-year; in Q2 2025, the overall revenue and net profit attributable to the parent company grew by 5.6%/18.9% year-on-year, and 16.3%/14.5% quarter-on-quarter, with growth rates significantly up from the same period in 2024. Among the sub-sectors, rare earths and magnetic materials, gold, and copper performed the most prominently, with net profits attributable to the parent company growing by 624.1%/58.8%/40.2% year-on-year in H1 2025, while the aluminum sector's growth rate was relatively low at 1.5%, and the lithium sector saw a year-on-year decline of 87.6%. In terms of quarter-on-quarter data for Q2 2025, gold, nickel, cobalt, tin, and tungsten grew by 49.1%/45.2%/43.8% quarter-on-quarter, showing excellent performance, while lead, zinc, and aluminum were relatively weak, at -15.7%/6.1%. As of August 29, 2025, the price-to-earnings ratio (TTM) of the nonferrous metal sector was 21.2 times, and the price-to-book ratio was 2.8 times, reaching a high since 2022, but still having room to reach the 2021 peak. Among the sub-sectors, aluminum, copper, and nickel, cobalt, tin, and antimony have low PE valuations, with the forecasted PE for 2025 being only 11/15/18 times; the PB valuations for lithium and aluminum sectors are low, currently only 1.8/1.9 times.

Holding and Dividend Analysis: Funds continue to increase their holdings in industrial metals, and mid-term dividends in the industry have improved significantly.

As of the end of Q2 2025, the market value of fund holdings in the nonferrous metal industry was 127 billion yuan, ranking 9th among 30 industries in the entire market; the market value of holdings accounted for 1.8% of the fund's stock investment value, remaining basically stable compared to the end of 2024, and overall at a high level From a sector perspective, the positions in industrial metals, precious metals, and rare metals account for 2.3%, 0.8%, and 0.9% respectively, with industrial metals and precious metals continuing to show an increasing allocation trend and high allocation status. In terms of individual stocks, there is a significant increase in positions related to copper and gold, while aluminum shows a concentrated reduction in positions. In the first half of 2025, the overall dividend payout ratio of the metal industry reached 15.0%, an increase of 5.6 percentage points year-on-year; the gap compared to the overall dividend payout ratio of all A-shares narrowed from 9.5 percentage points to 5.4 percentage points. In the first half of 2025, the dividend payout ratios for industrial metals, precious metals, and rare metals reached 16.9%, 8.4%, and 9.8% respectively.

Outlook for the Metal Industry: A comprehensive strengthening trend is expected to continue.

Looking ahead, we are optimistic about gold prices reaching new highs after the interest rate cuts begin, potentially hitting $4,000 per ounce; copper prices are expected to benefit from strong fundamentals, potentially reaching $10,500 per ton, with a clear upward trend in sector valuations. Supply disruptions combined with a high-to-low trend in the sector highlight the bottom opportunities in battery metals. Additionally, the strategic value of rare earths and tungsten remains prominent, and the profitability and valuation of the aluminum sector are expected to resonate upward. In the metal materials sector, we anticipate that themes such as solid-state batteries and AI servers will continue to maintain high prosperity, with related materials like solid-state electrolytes and copper foils likely to benefit.

Risk Factors:

The risk of a significant decline in metal prices; the risk that the domestic economic recovery is not as expected; the risk of an overseas economic recession; the risk that the Federal Reserve's interest rate cuts are less than expected; the risk of upstream supply growth exceeding expectations; operational risks of enterprises' overseas assets; the risk that the construction progress of new production capacity by enterprises is less than expected; risks arising from unexpected changes in industry policies; the risk that the severity of safety supervision and environmental protection situations exceeds expectations