Analysts are still keen on Glencore

THOUGH Glencore Xstrata may battle to placate communities around its Mpumalanga collieries, investment analysts still swoon over the company.

It’s worth R833-billion on the JSE thanks to its secondary listing last year. Analysts rate it as one of the hotter prospects on the local bourse ahead of its financial results next week. Most analysts rate it a buy, expecting its share price of around R58 to climb above R65 over the next year.

In a research report this week, Credit Suisse also rated it as a buy on the London Stock Exchange, expecting an upside of nearly 20% on its current price.

“[This year] will be the year for Glencore to deliver targeted costsavings, improve the balance sheet and prove the returns-focused approach. Successful execution will allow the company to increase cash returns and capitalise on growth opportunities further down the line,” it said.

This adds to the hype after brokerage Merrill Lynch last month rated the shares as a buy on the expectation that the sale of assets would boost the share price.

Glencore will release results for 2013 this week, and is expected to show a notable increase in pretax profit. An update last month revealed that it had a 26% rise in copper production last year, with the African businesses increasing production 43%.

Since listing on the JSE last year, Glencore hasn’t exactly shot out the lights as the share price climbed only 9.6%

Still, many local investors don’t know much about the company’s intriguing past.

Glencore was created in 1994 after notorious oil trader Mark Rich sold his shares in his company to management, which then renamed it. Rich, who died in June, was indicted in the US in 1983 for 65 criminal offences. He was later pardoned by the then president Bill Clinton.