1. Materials
Yao-Yu Liu

2. Overview

3. Overview

4. Overview
YTD Performance vs S&P 500
5 yr Performance vs S&P 500

5. Overview
1 yr Performance vs S&P 500
QTD Performance vs S&P 500

6. Industries within Materials
Overview
Industries within Materials
Major Holdings

7. Business Analysis
Late Expansionary cycle widens profit margins for this sector
Trump’s Tax reform will strengthen sector if it succeeds
Weaker dollar = Higher Commodities Prices
Sensitive to economic strength/Demand driven
Global Oversupply in commodities market
Foreign competition
Markets moving towards Late Expansion
*End of 2016

8. Business Analysis Porter’s Five Forces Threat of New Entrants Low
Unclaimed natural resources low
High Gov. regulation
High capital requirement
Rivalry
High
Low differentiation b/w competitors
Mature industry – Fight for market share
Price competition high
Buyer Power
Leverage low differentiation in market
Price competition high – easily able to switch suppliers
Supplier Power
Most companies have vertically integrated
Low existing suppliers
Threat of Substitutes
Little to no substitutes for raw materials
Many products highly specialized (chemicals)

9. Economic Analysis
EURUSD vs Commodities

10. Economic Analysis
S5MATR vs Crude Oil

11. Economic Analysis
S5MATR vs US GDP Growth

12. Financial Analysis
S5MATR Sales

13. S5MATR Operating & Gross Margin
Financial Analysis
S5MATR Operating & Gross Margin

14. Financial Analysis
S5MATR Earnings

15. Valuation Analysis
10 yr SPX vs S5MATR

16. Valuation Analysis
10 yr Industry P/E

17. Valuation Analysis
10 yr Industry P/B

18. Valuation Analysis
10 yr Industry P/S

19. Valuation Analysis
10 yr Industry P/EBITDA

20. Recommendation Slightly Overweight (Keep SIM weight)
US and various markets moving towards a Late Expansionary phase
Weakened dollar will drive commodities prices up
Highly cyclical and at the mercy of demand – hard to forecast
Focus on Containers & Packaging
Shy away from Metals & Mining

21. Questions?