STOCKS | Huatai Securities: A-Share Nonferrous Leaders May Have Room to Rebound After Valuation Compression

Huatai Securities said a sharp decline in leading A-share nonferrous stocks mainly reflected valuation compression rather than damage to earnings per share. According to Jin10, a Huatai Securities research note said that as of July 6, the iFind consensus expectation for 2026 EPS for the relevant companies had been revised upward over the past nearly 180 days, indicating solid profit expectations, while the sector’s oversold conditions may have been driven by valuation compression. The note said that as of July 3, the PE-TTM percentiles since 2020 for the CSI Gold, aluminum, and copper sector indices were 11.7%, 5.1%, and 42.1%, respectively. It added that relative to the overall A-share market’s PE-TTM, the three sectors were at low percentiles of 0.2%, 0.0%, and 0.1% since 2020. Huatai Securities also cited easing tensions in the U.S.-Iran conflict and a marginal improvement in risk appetite. It said commodity fundamentals for the A-share nonferrous sector remained at a high level, while valuations were at historical lows. Comparing with overseas pricing, the note said downside room for leading A-share nonferrous stocks might be limited, while upside potential could be considerable, describing the setup as a high-odds trading window.