An­glo’s South Amer­i­can samba

Finweek English Edition - - Companies & Markets - BREN­DAN RYAN

AN­GLO AMER­I­CAN A STRIK­ING MES­SAGE from An­glo Amer­i­can CEO Cyn­thia Car­roll’s up­beat out­look con­cerned where the group in­tends spend­ing the US$45bn in cap­i­tal ex­pen­di­ture ear­marked to drive its growth plans. The bulk of it is go­ing into cop­per and iron ore projects in South Amer­ica. The pre­cise level of ex­pen­di­ture – which An­glo won’t quan­tify – dwarfs the amount ear­marked for projects in South Africa, which are mainly on ex­pan­sions at An­glo Plat­inum and Kumba Iron Ore.

Car­roll stated at last week’s pre­sen­ta­tion of the group’s in­terim re­sults to endJune that An­glo would dou­ble its out­put of cop­per over the next five years and push up its iron ore pro­duc­tion five times over the same pe­riod.

She added An­glo would grow its mar­ket share in all its ma­jor busi­nesses as a re­sult of its planned pro­duc­tion growth in both raw ma­te­ri­als, as well as nickel and met­al­lur­gi­cal coal. It means An­glo will ef­fec­tively be tak­ing busi­ness from its peers BHP Bil­li­ton and Rio Tinto.

Judg­ing by the con­tin­u­ing drop in An­glo’s share price, it seems those bullish pre­dic­tions are be­ing ig­nored by the mar­ket. Nu­mis Se­cu­ri­ties rated An­glo as a “hold” fol­low­ing its re­sults and is scep­ti­cal about Car­roll’s claims that Chi­nese eco­nomic growth will com­pen­sate for slow­downs in the ma­jor West­ern economies.

An­glo’s price at cur­rent lev­els at around R378 is down 32% on its 12-month high of R557/share as the mar­kets go through an­other bout of jit­ters. The wor­ries are the familiar ones over the on-go­ing fall­out from the sub-prime mort­gage cri­sis and whether the com­mod­ity boom is over – which has been called three times over the past three years by my reck­on­ing. Ev­ery time re­sources shares have taken a hit and then re­cov­ered.

If you be­lieve the com­mod­ity boom isn’t over, then this is a clear buy­ing op­por­tu­nity in An­glo and other re­sources stocks.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.