Buy Rating Given by Brokerage Firms

Upward trend period:

1. Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. (000060), gained 53.52% from 4 Jan to 6 Mar 2006, Guosen Securities estimated a P/E of 10-11 for zinc stocks, and thus maintained its 'Recommend' rating on the company, as 'current valuation' was low

2. Shenzhen Zhongjin Lingnan Nonfemet jumped 495.47% from 4 Jan 2006 to 2 Apr 2007, China Galaxy Securities upgraded its profit projection for 2007 and 2008 to RMB 2.41 and RMB 2.54 per share respectively, and maintained a 'Moderate Buy' rating on the company

3. Shenzhen Zhongjin Lingnan Nonfemet skyrocketed 1377.93% from 4 Jan 2006 to 23 Oct 2007, Southwest Securities viewed an increasing revenue would be a factor underpinning the constant price of RMB 118.00, and projected EPS for 2008 and 2009 at RMB 2.21 and RMB 2.45 respectively

Downward trend period:

1. Shenzhen Zhongjin Lingnan Nonfemet fell 57.1% from 17 Oct 2007 to 13 May 2008, United Securities projected a price of RMB 36.20 per share at a P/F of 20 , or RMB 48.09 per share at a P/B of 4 while considering the resource value, based on analysts' estimated 2008 EPS of RMB 1.81. Thus, the institution maintained a 'Buy' rating on the company

2. Shenzhen Zhongjin Lingnan Nonfemet plunged 70.42% from 17 Oct 2007 to 23 Jun 2008, CITIC Securities projected a target price of RMB 20.00 per share at a dynamic P/E of 20 based on an adjusted profit estimation for 2008, and maintained a 'Buy' rating on the company, as the lead-zinc industry was at a relative low level despite a booming trend as a whole

3. Shenzhen Zhongjin Lingnan Nonfemet sank 68.56% from 17 Oct 2007 to 22 Jul 2008, United Securities believed that the adverse impact on the company was due to declining zinc prices, and saw looming integration opportunities and thus assigned a 'Buy' rating on the company

In addition, after distribution of a stock dividend for the first quarter in 2008, the EPS of Shenzhen Zhongjin Lingnan Nonfemet was RMB 0.2721, revenue decreased by 7.35% and net profit slid by 0.87%, as compared to the same period in 2007.

Background:

In addition to the surging resource integrations in the lead-zinc industry, the increasing lead-zinc price resulted in an increasing number of mining, dressing and melting lead-zinc companies, as well as decreasing average annual production. The production of the top 10 lead-zinc producer on the domestic market is less than 50% of GDP, indicating a low industry concentration.
Beginning this year, most non-ferrous metal products in China saw a decline in price for a variety of reasons.


Source: Securities Daily

Date: 21 Aug 2008

CN01/FL/SW/BT/KM