Valuation and Investment Timing Analysis of Non-Ferrous Metal Cyclical Stocks

Non-ferrous metal sectors (mainly copper and aluminum) have shown strong profitability recently. Zijin Mining (601899.SS) has an ROE of 30.60% and a net profit margin of 13.91%, while Yunnan Aluminum (000807.SZ) has an ROE of 16.55% and a net profit margin of 8.41% [0]. However, in terms of valuation, the P/E ratios of these two leading companies are 18.80x and 20.82x respectively, and their P/B ratios are 5.11x and 3.21x respectively, which are in the historically high range [0].

Copper prices broke through the historical high (11,771 USD/ton) in December 2025, mainly driven by supply concerns (Guosheng Securities expects the 2026 copper mine increment to be only 630,000 tons, which is difficult to match the growth in demand) and demand from emerging industries (AI, electric vehicles) [8][12]. The stock prices of the sector are highly correlated with copper prices. Zijin Mining and Yunnan Aluminum have risen by 112.85% and 118.21% year-to-date respectively, with gains of 24.60% and 54.83% in the past three months [0]. In terms of institutional strategies, CMB International recommends taking non-ferrous metals as “elastic offensive” assets and forming a barbell portfolio with high-dividend strategies [11].

1. Valuation needs to be combined with supply-demand fundamentals
   : Although current valuations are higher than historical averages, the long-term existence of supply gaps may support high valuations and even achieve a “Davis Double Click” (simultaneous increase in performance and valuation) [12].
2. Cyclical stock attributes still need attention
   : The non-ferrous metal sector is significantly affected by the macroeconomic cycle, so it is necessary to be alert to short-term volatility risks brought by global economic growth uncertainty.
3. Emerging industry demand reconstructs growth logic
   : Continuous demand growth in fields such as AI and electric vehicles may weaken traditional cyclical attributes and bring long-term growth momentum to the sector.

• Short-term price volatility risk: Copper prices are already at historical highs and are prone to fluctuations due to news.
• Valuation correction pressure: If the repair of supply-demand gaps is slower than expected, high valuations may face adjustments.
• Global economic downturn risk: Weak macroeconomics may suppress demand for non-ferrous metals.

• Sustained supply gap period: Against the background of limited copper mine increments in 2026, the sector still has room for performance improvement.
• Emerging industry demand boom: The rapid development of AI, electric vehicles and other fields will continue to drive copper and aluminum demand.
• Policy support: Rising expectations for China’s economic growth and related industrial policies may provide support for the sector.

This analysis is based on the latest market data (as of December 2025). The non-ferrous metal sector has outstanding profit performance but its valuation is at a historical high. Copper prices hit a record mainly driven by supply-demand gaps and emerging industry demand, and institutions are optimistic about the long-term prospects of the sector. Investors need to combine macroeconomic cycles, changes in supply-demand fundamentals and valuation levels to carefully grasp the investment timing of cyclical stocks and balance elastic offense and risk control.