Anglo American edges higher despite City concerns over disposals

Discussion in 'Market News' started by Lily, May 10, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Broker says it sees a subtle shift in Anglo’s strategy

    Despite mining shares remaining under pressure as the dollar rises and concerns re-emerge about slowing growth in China, Anglo American has managed to edge higher.

    Its shares are currently up 7p at 566.5p, but analysts at Haitong have been wondering whether the company’s disposal programme is on track. They said:

    Minor changes in management slides can be interesting, particularly if they relate to the core strategy of a company. Anglo has released a copy of a conference presentation this morning which looks to us like a subtle backing away from its disposal targets for 2016. For Anglo this is relevant as it is under pressure to deliver on its strategy to radically downsize the business and generate cash through aggressive asset sales. Given the pressure on management credibility (Anglo is already on Plan B, Plan A was to fix the existing assets), slight movements in goalposts can be critical.

    The issue is that the disposal plan now counts disposals previously announced. Asset sales now included in the 2016 target include Foxleigh (sold 4 April 2016 for an undisclosed sum), Callide (sold 20 January 2016 for an undisclosed sum), Dartbrook (sold 24 December 2015 for $36m) and Rustenberg (sold September 2015 for $333m).

    There is no change to the disposal target for 2016 and we are on track with our disposals to deliver $3-4bn this year. We have recently announced the sale of the Niobium & Phosphates business for $1.5bn, some 50% above market expectations, and this is the first of our major disposals this year, to add to a few smaller coal assets sales in Australia.

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