vk.com/id446425943
Anglo American – HOLD
Renaissance Capital
6 February 2019
Metals & Mining
Figure 79: Anglo American, $mn (unless otherwise noted) |
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Anglo American |
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AGLJ.J |
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Target price, ZAR: |
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340 |
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Market capitalisation, $mn: |
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36,489 |
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Share price, ZAR: |
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345 |
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Enterprise value, $mn: |
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51,574 |
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Potential 12-month return: |
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4.5% |
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Dec-YE |
2016 |
2017 |
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2018E |
2019E |
2020E |
Dec-YE |
2016 |
2017 |
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2018E |
2019E |
2020E |
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Income statement |
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Balance sheet |
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Revenue |
23,142 |
28,650 |
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29,833 |
28,499 |
28,130 |
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Net operating assets |
32,315 |
33,172 |
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32,171 |
31,897 |
32,800 |
Underlying EBITDA |
6,104 |
8,823 |
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9,593 |
9,916 |
8,645 |
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Financial instruments |
497 |
211 |
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172 |
199 |
208 |
Underlying EBIT |
3,822 |
6,247 |
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6,818 |
7,017 |
5,696 |
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Equity |
19,016 |
22,972 |
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23,517 |
25,343 |
25,973 |
Net interest |
-567 |
-635 |
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-473 |
-313 |
-245 |
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Minority interest |
5,309 |
5,910 |
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5,736 |
6,020 |
6,256 |
Taxation |
-821 |
-1,770 |
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-2,136 |
-2,125 |
-1,728 |
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Net debt |
8,487 |
4,501 |
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3,090 |
732 |
779 |
Minority interest in profit |
-329 |
-891 |
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-969 |
-1,138 |
-944 |
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Net profit for the year |
1,594 |
3,166 |
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3,044 |
3,441 |
2,779 |
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Balance sheet ratios |
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Underlying earnings |
2,210 |
3,272 |
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3,319 |
3,441 |
2,779 |
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Gearing* |
30.9% |
16.4% |
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11.6% |
2.8% |
2.9% |
Underlying EPS, USc |
172 |
257 |
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261 |
271 |
219 |
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Net debt to EBITDA |
1.4x |
0.5x |
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0.3x |
0.1x |
0.1x |
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RoCE |
10.8% |
17.8% |
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19.8% |
20.7% |
16.3% |
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Thomson Reuters consensus EPS, USc |
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240 |
258 |
230 |
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RoIC (after tax) |
6.0% |
15.1% |
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10.9% |
15.8% |
11.0% |
DPS declared, USc |
0 |
102 |
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104 |
135 |
207 |
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RoE |
12.4% |
15.6% |
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14.3% |
14.1% |
10.8% |
Underlying EBIT |
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Cash flow statement |
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Platinum |
185 |
512 |
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791 |
1,089 |
1,289 |
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Operating cash flow |
4,573 |
8,101 |
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6,210 |
8,916 |
6,748 |
EBIT margin |
4% |
10% |
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14% |
22% |
26% |
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Capex (net of disposals) |
-2,388 |
-2,150 |
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-2,268 |
-3,950 |
-3,867 |
Diamonds |
1,019 |
873 |
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738 |
775 |
789 |
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Other cash flows |
2,045 |
-688 |
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-182 |
0 |
0 |
EBIT margin |
17% |
15% |
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12% |
13% |
13% |
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FCF |
4,230 |
5,263 |
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3,760 |
4,966 |
2,881 |
Copper |
261 |
923 |
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1,228 |
1,074 |
1,004 |
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Equity shareholders' cash |
4,423 |
4,607 |
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2,722 |
3,973 |
2,102 |
EBIT margin |
9% |
22% |
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25% |
25% |
23% |
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Dividends and share buy-backs |
0 |
-621 |
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-1,311 |
-1,615 |
-2,149 |
Nickel |
-15 |
0 |
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94 |
37 |
113 |
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Surplus (deficit) cash |
4,423 |
3,986 |
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1,411 |
2,358 |
-48 |
EBIT margin |
-4% |
0% |
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17% |
7% |
18% |
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Cash flow ratios |
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Iron ore and manganese |
1,275 |
1,978 |
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1,391 |
2,331 |
1,666 |
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EBIT margin |
46% |
57% |
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40% |
63% |
51% |
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Working capital days |
52 |
33 |
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33 |
20 |
22 |
Coal |
1,112 |
2,274 |
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2,866 |
2,025 |
1,145 |
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Capex/EBITDA |
43.4% |
28.0% |
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27.7% |
45.7% |
51.0% |
EBIT margin |
21% |
32% |
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36% |
30% |
19% |
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FCF yield |
15.9% |
16.9% |
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10.0% |
12.5% |
7.2% |
Other |
-15 |
-313 |
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-289 |
-314 |
-311 |
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Equity shareholders' yield |
34.7% |
22.1% |
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9.5% |
12.1% |
6.4% |
Underlying EBIT |
3,822 |
6,247 |
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6,818 |
7,017 |
5,696 |
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Cash conversion |
2.0x |
1.4x |
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0.8x |
1.2x |
0.8x |
Income statement ratios |
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Valuation |
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$mn |
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EBITDA margin |
26% |
31% |
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32% |
35% |
31% |
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SoTP DCF fair value and calculation of target price |
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ZAR/sh |
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EBIT margin |
17% |
22% |
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23% |
25% |
20% |
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Platinum |
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8,224 |
91.3 |
EPS Growth |
169% |
49% |
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2% |
4% |
-19% |
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Diamonds |
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7,262 |
80.6 |
Dividend payout ratio |
0% |
40% |
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40% |
50% |
95% |
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Coal |
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6,535 |
72.5 |
Input assumptions |
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Copper |
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5,891 |
65.4 |
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Nickel |
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980 |
10.9 |
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ZAR/$ |
14.70 |
13.31 |
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13.24 |
14.31 |
14.14 |
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Kumba Iron Ore |
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4,197 |
46.6 |
Platinum, $/oz |
988 |
950 |
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880 |
870 |
1,070 |
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Samancor manganese |
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3,560 |
39.5 |
Diamond realisations, $/ct |
188 |
162 |
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171 |
171 |
181 |
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Anglo Ferrous Brazil |
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2,014 |
22.3 |
Copper, USc/lb |
221 |
280 |
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296 |
272 |
289 |
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Corporate & other |
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-3,999 |
-44.4 |
Hard coking coal, $/t |
144 |
188 |
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206 |
178 |
161 |
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Total enterprise value excluding minority interests |
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34,664 |
384.7 |
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Iron ore fines (62%Fe, CIF China), $/t |
58 |
71 |
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66 |
75 |
67 |
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Attributable net debt as at 31 December 2017 |
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-4,489 |
-49.8 |
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Investments as at 31 December 2017 |
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211 |
2.3 |
Required breakeven price |
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Equity value as at 4/2/2019 |
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30,386 |
337.2 |
Breakeven price - 3PGM, $/oz |
754 |
774 |
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815 |
752 |
701 |
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Rounded to |
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340.0 |
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Breakeven price - copper, USc/lb |
198 |
216 |
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203 |
208 |
228 |
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Share price on 1/2/2019 |
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345.2 |
Breakeven price - coking coal, $/t |
115 |
107 |
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118 |
118 |
121 |
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Expected share price return |
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-1.5% |
Breakeven price - Export thermal coal, $/t |
46 |
59 |
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61 |
64 |
74 |
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Plus: expected dividend yield |
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6.0% |
Sales volumes |
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Total implied one-year return |
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4.5% |
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Platinum, koz |
2,416 |
2,505 |
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2,424 |
2,050 |
2,000 |
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Share price range, ZAR: |
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Diamonds (consolidated sales), mn ct |
30.0 |
33.1 |
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31.7 |
30.3 |
30.3 |
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12-month high on 1/2/2019 |
347 |
12-month low on 4/4/2018 |
262 |
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Total iron ore, mnt |
59 |
61 |
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46 |
62 |
65 |
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Price move since high |
-0.5% |
Price move since low |
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32.0% |
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Total copper segment, kt |
577 |
579 |
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668 |
663 |
653 |
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Metallurgical coal, mnt |
20.7 |
19.8 |
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22.0 |
22.0 |
22.0 |
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Calculation of discount rate |
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Export thermal coal, mnt |
34.1 |
31.0 |
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30.0 |
28.3 |
30.1 |
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Attributable Cu eq volumes, kt |
2,974 |
2,923 |
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2,749 |
2,812 |
2,841 |
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WACC |
9.5% |
Cost of debt |
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5.0% |
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Volume growth |
0.1% |
-1.7% |
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-5.9% |
2.3% |
1.0% |
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Risk-free rate |
4.0% |
Tax rate |
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30% |
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Contribution to FY18E attributable underlying EBITDA |
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Equity risk premium |
5.0% |
After-tax cost of debt |
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3.5% |
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Beta |
1.30 |
Debt weighting |
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15% |
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Platinum (80% of |
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Cost of equity |
10.5% |
Terminal growth rate |
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3.0% |
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AMS) |
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10% |
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Diamonds (85% of |
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Coal |
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De Beers) |
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Valuation ratios |
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39% |
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12% |
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Dec-YE |
2016 |
2017 |
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2018E |
2019E |
2020E |
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P/E multiple |
5.8x |
6.4x |
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8.7x |
9.6x |
11.9x |
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Dividend yield |
0.0% |
6.2% |
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4.6% |
5.2% |
8.0% |
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Copper |
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EV/EBITDA |
4.8x |
4.1x |
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4.6x |
4.6x |
5.3x |
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Nickel |
16% |
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P/B |
0.7x |
0.9x |
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1.2x |
1.3x |
1.3x |
Samancor |
Minas Rio Kumba Iron Ore |
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NAV per share, $ |
14.8 |
18.0 |
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18.5 |
20.0 |
20.5 |
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Manganese |
2% |
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NAV per share, ZAR |
217 |
240 |
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245 |
285 |
289 |
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8% |
-4% |
(51%) |
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9% |
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* Gearing defined as net debt/(net debt +equity)
Source: Bloomberg, Thomson Reuters, Company data, Renaissance Capital estimates
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