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JP Morgan reiterates 'overweight' on Anglo American, Glencore, Vedanta and Kaz
Analysts at JP Morgan reiterated their 'overweight' stance on shares of Anglo American, Glencore, Vedanta and KAZ Minerals.
On Anglo American, they said the company had "scope" to beat expectations, highlighting the improving risk profile of its activities in South Africa, as highlighted by the recent High Court ruling in that country, adding that a restructuring of its operations there remained a "valuable" - if distant - option.
Glencore also had its attractions, they argued. Trading on an EV/EBITDA multiple of 5.0 to 4.2 for 2018 and 2019, respectively, on their estimates it was the second cheapest diversified miner - behind Anglo American (which was on 3.8 and 3.7 times' EV/EBITDA).
Back out the marketing division and those multiples were even more "compeling", at 4.3 and 3.7, with the outfit also offering a "well-articulated" medium-term capital allocation strategy - "which could result in above-consensus shareholder returns."
In the case of Vedanta, the analysts called attention to its "attractive" late cycle commodity mix, which when combined with its operational and financial gearing made it their prefered name.
Among base metals, the investment bank's "favoured" producer was KAZ Minerals, which was offering growth, low-cost operations, attractive valuation (5.6- 5.2x 2018/2019E EV/EBITDAs) and an ongoing transfer of value from debt to equity holders.
JP Morgan lifted its target price on Anglo's shares marginally, from 2,000p to 2,010p, and did the oppossite with KAZ's, trimming its target from 1,020p to 1,000p.