Metals, Mining, and Mining Equipment

September 20, 2016

Exhibit 1: China's Monthly Residential Real Estate Construction Activity, Rolling 6Month Moving Average, %Y/Y

Residential Starts
Land Area Purchased

pla yers

Feb-16

Aug-16

System > 5,000

play ers

May-16

Module ~ 400

May-15

Feb-15

Nov-14

Aug-14

May-14

Aug-13

May-13

Feb-13

Nov-12

Aug-12

May-12

Feb-14

~100
play ers

Nov-15

Cells

~50 pla yers

Aug-15

Ingot/Wafer

Nov-13

60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%

Nov-11

>40 play ers

Feb-12

Polysilicon

Residential Completions
Residential Space Sold

Note: January assumes December's growth as NBS does not release January statistics.
Source: National Bureau of Statistics, Axiom Capital Research.

Exhibit 2: Avg. Price Change of New Residential Buildings, by Tiered-Cities, %M/M

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Polysilicon

4.0%

>40 play ers

Cells

~100
play ers

Ingot/Wafer

Cells

~50 pla yers

~100

play ers

Module ~ 400

System > 5,000

play ers

pla yers

Module ~ 400

System > 5,000

play ers

pla yers

3.0%

2.0%
1.0%
0.0%

-1.0%
-2.0%

Tier 1

Tier 2

Tier 3

Other

Total

Source: National Bureau of Statistics (NBS), Axiom Capital Research.

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Axiomcapital.com

Cells

~100
play ers

Module ~ 400

System > 5,000

play ers

pla yers

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Page 3 of 11

Metals, Mining, and Mining Equipment

September 20, 2016

Exhibit 3: New Home Prices 70-Cities M/M: Number of Cities Up vs. Down
Polysilicon
>40 play ers

100%

Net Ingot/W
% of cities
afer

No. of cities

Cells

Module ~ 400

~100
play ers

~50 pla yers

play ers

70

System > 5,000

pla yers

60
50%
50
0%

40
30

-50%

20
-100%
10
0

Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16

-150%

Number increasing (rhs)

Number decreasing (rhs)

Source: National Bureau of Statistics (NBS), Axiom Capital Research.

Exhibit 4:
China's Secondary Economic
Indicators
versus Headline
GDP, %Y/Y
Polysilicon
Ingot/W
afer
Cells ~100
>40 play ers

~50 pla yers

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

play ers

Cells

~100

play ers

Module ~ 400
play ers

System > 5,000

pla yers

Module ~ 400

System > 5,000

play ers

pla yers

Note: Each indicator applies the Y/Y change on the 4-month moving average (4MMA), except GDP growth.
Source: National Bureau of Statistics, Customs General Administration, China Automotive Info Net, Axiom Capital Research.

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Axiomcapital.com

Cells

~100
play ers

Module ~ 400

System > 5,000

play ers

pla yers

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Page 4 of 11

Metals, Mining, and Mining Equipment

September 20, 2016

Exhibit 5: Chinas Apparent Oil Demand

Polysilicon

11.5

MMIngot/W
bbl/d afer

>40 play ers

Cells

~100
play ers

~50 pla yers

Module ~ 400

System > 5,000

play ers

pla yers

11.0
10.5
10.0
9.5
9.0
8.5

8.0
J

2010

2011

2012

2013

2014

2015

2016

Note: Apparent oil demand is estimated as barrels of crude oil processed, plus net imports of refined petroleum products.
Source: National Bureau of Statistics, Customs General Administration, Axiom Capital Research.

Exhibit 6:
China's YTD Apparent Steel
Demand
and Y/Y Change
Polysilicon
Ingot/W
afer
Cells
>40 play ers

Polysilicon

600

Ingot/W
million metric
tons afer

>40 play ers

Module ~ 400

~100
play ers

~50 pla yers

Cells

pla yers

35%

Module ~ 400

~100
play ers

~50 pla yers

System > 5,000

play ers

play ers

System > 5,000

pla yers

30%
500
25%
400

20%

15%
300

10%
200

5%
0%

100
-5%

Apparent steel demand (lhs)

Avg. apparent demand, '01-'15 (lhs)

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

-10%

2001

%Y/Y (rhs)

Source: National Bureau of Statistics, World Steel Association, China Iron & Steel Association, Axiom Capital Research.

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Axiomcapital.com

Cells

~100
play ers

Module ~ 400

System > 5,000

play ers

pla yers

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Page 5 of 11

Metals, Mining, and Mining Equipment

September 20, 2016

Exhibit 7: Chinas Aggregate Financing to the Real Economy, by Component

Polysilicon
>40 play ers

4,000

CNYIngot/W
billion afer

Cells

~100
play ers

~50 pla yers

3,500

Module ~ 400

System > 5,000

play ers

pla yers

3,000
2,500
2,000
1,500
1,000
500
0

RMB loans
Bank bills

Social Financing Statistics (CNY bn)

Total Social Financing
RMB Bank Loan
Foreign Currency Loan (in RMB)
Entrusted Loan
Trust Loan
Undiscounted Bankers' Acceptances
Net Corporate Bond
Non-Financial Equity

Aug-15
1,085.6
775.6
(62.0)
119.8
31.7
(157.7)
288.0
47.9

Sep-15
1,329.0
1,041.7
(234.4)
242.2
(15.9)
(127.9)
352.4
34.9

Foreign loans
Bond financing

Oct-15

Nov-15 Dec-15

Jan-16

530.3 1,022.4 1,815.1 3,425.3

557.4
887.3
832.3 2,537.0
(131.7) (114.2) (130.8) (172.7)
139.0
91.0
353.0
217.5
(20.1) (30.1)
37.0
55.2
(369.7) (254.5) 154.5
132.7
304.1
334.7
356.0
457.9
12.1
56.8
153.1
146.9

Entrusted loans
Non-fin equity

Jul-16

May-16

Trust loans

Feb-16 Mar-16 Apr-16 May-16 Jun-16

824.5 2,404.0
810.5 1,317.6
(56.9)
0.6
165.0
166.0
30.8
73.2
(370.5) 17.3
131.8
719.0
81.0
56.2

Mar-16

Jan-16

Nov-15

Sep-15

Jul-15

May-15

Mar-15

Jan-15

Nov-14

Sep-14

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

500

Jul-16

Aug-16

Aug-16

Aug-16

Aug-16

M/M Chg Y/Y Chg

787.2
683.6 1,683.6 487.9 1,469.7 981.8
384.1
564.2
937.4 1,314.1 455.0
796.9
341.9
21.3
(70.7) (52.4) (26.7) (40.1)
7.0
47.1
69.0
169.4
156.6
172.1
177.5
143.2
(34.3)
23.4
26.9
12.1
81.0
21.0
73.6
52.6
41.9
(277.6) (506.7) (272.0) (512.2) (37.7)
474.5
120.0
242.8
(18.4) 236.5
218.8
330.6
111.8
42.6
95.1
107.3
115.8
113.5
107.5
(6.0)
59.6

Aug-16

%M/M
201.3%
75.1%
-117.5%
-19.3%
251.1%
-92.6%
51.1%
-5.3%

%Y/Y
35.4%
2.7%
-111.3%
19.5%
132.2%
-76.1%
14.8%
124.4%

Source: Peoples' Bank of China (PBOC), Axiom Capital Research.

Exhibit 8: China's Local Government Debt Issuance YTD

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Polysilicon

6,000

>40 play ers

Cells

Module ~ 400

~100
play ers

CNYIngot/W
billion afer

Cells

~50 pla yers

System > 5,000

play ers

~100

pla yers

Module ~ 400

System > 5,000

play ers

pla yers

play ers

5,000
4,000
3,000
2,000
1,000

May-16

Jan-16

Sep-15

Jan-15

May-15

Sep-14

May-14

Jan-14

Sep-13

May-13

Jan-13

Sep-12

May-12

Jan-12

Sep-11

Jan-11

May-11

Sep-10

May-10

Jan-10

Sep-09

May-09

Jan-09

Sep-08

May-08

Local gov't debt issuance, cumulative YTD

Source: ChinaBond, Axiom Capital Research.

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Page 6 of 11

Metals, Mining, and Mining Equipment

September 20, 2016

Exhibit 9: PBOC's Medium Term Lending Facilities (MLF), YTD

3,300

>40 play ers

Ingot/Wafer
Billion
CNY
~50 pla yers

Cells

35

Module ~ 400

~100
play ers

play ers

1-year (lhs)

Sep-16

Jul-16

Aug-16

Jun-16

May-16

Apr-16

May-15

6-month (lhs)

Feb-16

-5

Mar-16

700

Jan-16

Dec-15

200

Nov-15

Oct-15

300

Sep-15

10

Jul-15

800

Aug-15

15

Jun-15

1,300

Apr-15

20

Feb-15

1,800

Mar-15

25

Jan-15

2,300

Nov-14

30

3-month (lhs)

System > 5,000

pla yers

2,800

Dec-14

Polysilicon

%Y/Y on total (rhs)

Source: People's Bank of China (PBOC), Axiom Capital Research.

Exhibit 10:
Change in Monthly Long-Term
Household Loans and
Change in Mortgage Loans,
%Y/Y
Polysilicon
Ingot/Wafer
Cells ~100
Module ~ 400
>40 play ers

Polysilicon
>40 play ers

~50 pla yers

350%
300%

Ingot/Wafer
~50 pla yers

play ers

Cells

~100

play ers

play ers

System > 5,000

pla yers

Module ~ 400

System > 5,000

play ers

pla yers

250%

200%
150%

100%
50%

0%
-50%

-100%
Jun-11
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
Aug-13
Oct-13
Dec-13
Feb-14
Apr-14
Jun-14
Aug-14
Oct-14
Dec-14
Feb-15
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16

-150%

Change in total long-term household loans

Change in mortgage loans

Note: Mortgage lending is a component of total household loans.

Source: National Bureau of Statistics, Axiom Capital Research.

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Axiomcapital.com

Cells

~100
play ers

Module ~ 400

System > 5,000

play ers

pla yers

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Page 7 of 11

Metals, Mining, and Mining Equipment

September 20, 2016

Exhibit 11: China's Long-Term Household Loans, Cumulative YTD

Polysilicon

4,000

CNYIngot/W
billions afer

>40 play ers

Cells

Module ~ 400

~100
play ers

~50 pla yers

120%

play ers

3,500

System > 5,000

pla yers

100%

3,000

80%

2,500

60%

2,000
40%

1,500

20%

1,000

0%

500
0

-20%

China's Long-Term Household Loans, Cumulative YTD (lhs)

%Y/Y (rhs)

Source: National Bureau of Statistics, Axiom Capital Research.

Exhibit 12: China Bank Loans to Non-Financial Institutions

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Polysilicon
>40 play ers

75

Ingot/Wafer

Cells
Cells

CNY trillions
~50 pla yers

Module ~ 400

~100
play ers

System > 5,000

play ers

Module ~ 400

~100

play ers

play ers

pla yers

14.5%

System > 5,000

pla yers

14.0%

70

13.5%

65

13.0%
12.5%

60

12.0%

55

11.5%
11.0%

50

10.5%

Loans to non-financial institutions (lhs)

Jul-16

May-16

Mar-16

Jan-16

Nov-15

Sep-15

Jul-15

May-15

Mar-15

Jan-15

Nov-14

Sep-14

Jul-14

May-14

Mar-14

10.0%

Jan-14

45

%Y/Y (rhs)

Source: People's Bank of China (PBOC), Axiom Capital Research.

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Axiomcapital.com

Cells

~100
play ers

Module ~ 400

System > 5,000

play ers

pla yers

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Page 8 of 11

Metals, Mining, and Mining Equipment

September 20, 2016

Exhibit 13: China's Credit Growth (TSF) versus Bank Asset Growth versus Bank Deposit Growth, %Y/Y
Polysilicon

35%

Ingot/Wafer

>40 play ers

Cells

~100
play ers

~50 pla yers

Module ~ 400

System > 5,000

play ers

pla yers

30%
25%
20%
15%
10%
5%

Commercial Bank Assets y/y%

TSF y/y%

Apr-16

Sep-15

Feb-15

Jul-14

Dec-13

May-13

Oct-12

Mar-12

Aug-11

Jan-11

Jun-10

Apr-09

Nov-09

Sep-08

Feb-08

Jul-07

Dec-06

May-06

Oct-05

Mar-05

Aug-04

Jan-04

0%

Commercial Bank Deposits, y/y%

Note: Bank assets are as of July, whereas TSF and bank deposits are as of August.
Source: Peoples' Bank of China (PBOC), Axiom Capital Research.

Polysilicon
Ingot/W
afer Banks' Claims on
Cells
~100
Module ~ 400
Exhibit 14:
China's Total Bank Assets
versus
Non-Financial
Institutions
>40 play ers

Polysilicon

~50 pla yers

250

>40 play ers

play ers

Ingot/Wafer

Cells

pla yers

12%

Module ~ 400

~100
play ers

CNY trillions
~50 pla yers

System > 5,000

play ers

play ers

System > 5,000

pla yers

11%

200

10%
150

9%

100

8%
7%

50

6%

Total bank assets

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

5%

Jan-15

Claims on non-financial institutions

% of bank assets (rhs)

Source: Peoples' Bank of China (PBOC), Axiom Capital Research.

Polysilicon

Ingot/Wafer

>40 play ers

~50 pla yers

Axiomcapital.com

Cells

~100
play ers

Module ~ 400

System > 5,000

play ers

pla yers

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Page 9 of 11

Metals, Mining, and Mining Equipment

September 20, 2016

Analyst Certification:
I, Gordon Johnson, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer.
Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this
research report.
Explanation of Ratings
Outperform/Buy We expect the stock to outperform the S&P 500 Index and post absolute price appreciation of at least 10%.
Neutral/Hold We expect the stock to perform in line with the S&P 500 Index.
Underperform/Sell We expect the stock to underperform the S&P 500 Index and post absolute price depreciation of at least 10%
Current distribution of ratings as of September 20, 2016
Rating

Number

Outperform/Buy

13

36%

Neutral/Hold

17%

Underperform/Sell

17

47%

Investment banking services were not provided to any of the companies with the aforementioned ratings. All current required disclosures are available
rd
by contacting: Compliance Department at 780 Third Avenue, 43 Floor, New York, NY 10017
Valuation Methods for Fundamental Analysis
One or more of the following valuation methods are used in making a price projection: Analysis of the supply and demand for a security to ascertain
how high or low a stock price may move before either overhead supply or underneath demand develops; Analysis of a companys P/E ratio, price/book
ratio, price/cash ratio, earnings expectations or sales growth as they relate within an industry group or to the broader market; Dividend yield of the S&P
500 vs. the yield of the 10-year government bond; Individual sector analysis along with investor sentiment, and Federal Monetary Policy.
Valuation Methods for Technical Analysis
Valuations are based on technical analysis techniques using some or all of the following inputs: trend recognition, pattern recognition, Japanese
candlestick formations, oscillator readings (short-term), relative performance, money flows, support and resistance levels, volume, sentiment indicators,
and seasonal analysis.
This communication is neither an offer to sell nor a solicitation of an offer to buy any securities mentioned herein. This publication is confidential and for
the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior
written consent of Axiom Capital Management, Inc.
This material has been prepared by Axiom Capital Management, Inc., a registered U.S. broker-dealer, employing appropriate expertise, and in the belief
that it is fair and not misleading. Axiom Capital Management, Inc. accepts no liability for loss arising from the use of the material presented in this
report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to
Axiom Capital Management, Inc. This report is not to be relied upon in substitution for the exercise of independent judgment. Axiom Capital
Management, Inc. may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the
information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared them
and Axiom Capital Management, Inc. is under no obligation to ensure that such other reports are brought to the attention of any recipient of this report.

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Metals, Mining, and Mining Equipment

September 20, 2016

Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is
made regarding future performance. Information, opinions, and estimates contained in this report reflect a judgment at its original date of publication
by Axiom Capital Management, Inc. and are subject to change without notice. The price, value of, and income from any of the securities mentioned in
this report can fall as well as rise. The value of securities is subject to exchange rate fluctuations that may have a positive or adverse effect on the price
or income of such securities. Investors in securities such as ADRs, the values of which are influenced by currency volatility, effectively assume this risk.
Securities recommended, offered, or sold by Axiom Capital Management, Inc.: (1) are not insured by the Federal Deposit Insurance Corporation; (2) are
not deposits or other obligations of any insured depository institution; and (3) are subject to investment risks, including the possible loss of principal
invested. Indeed, in the case of some investments, the potential losses may exceed the amount of initial investment and, in such circumstances; you
may be required to pay more money to support these losses.
We and our affiliates, officers, directors, and employees, excluding equity analysts, will from time to time have long or short positions in, act as principal
in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to this research.
ADDITIONAL DISCLOSURES
The analyst or a member of the analysts family holds a stock or options position in the following securities mentioned in this report: None.
Options Disclosures
Options are not suitable for all investors and not all options strategies are suitable for all investors who may be suitable to trade options. At or prior to
being approved for options trading, investors must be given and should read Characteristics and Risks of Standardized Options, the risk disclosure
booklet issued by the options exchanges. All accounts must meet options suitability requirements prior to any options trading. Options strategies may
entail significant risks. Certain strategies may contain risks beyond the initial investment and cause the investor to incur losses beyond such investment.
Risks associated with the strategies contained herein are included in the discussions on breakeven point, maximum risk and maximum loss discussions,
to the extent applicable. Annualized returns cited in this report may be achieved only if the parameters described can be duplicated and there is no
certainty of doing so.
Axiom Capital Management, Inc. previously provided to you a copy of the booklet entitled Characteristics and Risks of Standardized Options. A current
rd
copy of this booklet may be obtained by calling Eric Miller or by sending a written request to: Axiom Capital Management, Inc. at 780 Third Avenue, 43
Floor, New York, NY 10017.

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Page 11 of 11