Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Anglo American between a rock and a hard place

Anglo American between a rock and a hard place

Anglo American (LON:AAL) has made two big strategic moves in the last fortnight but it is a long way from being out of the woods, JPMorgan argues.

On January 8 the group unveiled its new chief executive officer (CEO), Mark Cutifani, who starts on April 3, while on January 15 its Amplats subsidiary published a strategic review of its platinum business, which caused uproar in South Africa as it flagged 14,000 job losses.

JP Morgan (JPM) considers Cutifani “the stand out candidate for addressing Anglo American’s long term underperformance” relative to peers.

JPM notes Anglo has lagged BHP Billiton (LON:BLT) by 413% and Rio Tinto (LON:RIO) by 134% in the last ten years, so Cutifani has a lot of catching up to do.

Unfortunately, in JPM’s view, the shares are set to be weighed down this year by the difficulty and fall out of implementing essential operational change in South Africa.

Anglo American derives most of its earnings from South Africa; JPM’s numbers project 54% of Anglo American’s full-year earnings will come from South Africa in 2013.

“We reduce our Dec-13 target price to £16.30/shr (£16.70/shr previously) and reiterate our underweight [rating],” JPM’s Frasier Jamieson said.

Anglo American releases a trading update this Friday in which it will report fourth quarter production data.

Citigroup has forecast “a disappointing 15% drop in copper equivalent volumes year-on-year,” noting most operations have been plagued by labour issues, declining grades and/or weak markets.

Citi’s key forecasts are: equivalent refined platinum down 50% year-on-year to 292,000 ounces; diamonds -16% to 5.5mln carats, copper -9% to 154,700 tonnes, iron ore -14% to 10.7mln tonnes.

View full AAL profile View Profile

Anglo American Timeline

Related Articles

Mawson Resources poised for more drilling after bonanza gold grades at Rompas East
October 18 2017
The group's key assets is the Rompas/Rajapalot project in Fiinish Lapland
Wayne-Rossiter-photo.JPG
July 28 2017
We are joined exclusively by Wayne Rossiter, CEO, in Proactive Q&A Sessions™.
picture of Chinese flag and gold
August 21 2017
Wishbone has supply agreements with miners based in Peru, Ghana, Chile and Colombia.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use