Shares Magazine - August 22, 2019

GREAT IDEAS

22 August 2019 | SHARES | 13

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ANTOFAGASTA

2018 2019

W

ant to buy a best-in-

ĐůĂƐƐĐŽŵƉĂŶLJǁŚŝůĞ

ŵĂƌŬĞƚƐĞŶƟŵĞŶƚ

is poor? Now’s your chance

ǁŝƚŚŚŝůĞĂŶĐŽƉƉĞƌŵŝŶĞƌ

Antofagasta (ANTO).

ϮϬйƐŚĂƌĞƉƌŝĐĞĨĂůůƐŝŶĐĞ

ƉƌŝůŝƐƉĂƌƟĂůůLJĚŽǁŶƚŽƚŚĞ

price of copper recently slipping

to levels not seen since the last

global recession.

The shares have been dragged

ĚŽǁŶďLJĨĞůůŽǁĐŽƉƉĞƌŵŝŶĞƌ

KAZ Minerals (KAZ) recently

ĐƵƫŶŐŝƚƐĚŝǀŝĚĞŶĚĂŶĚƐĂLJŝŶŐ

ƚŚĞƐŚŽƌƚƚĞƌŵŽƵƚůŽŽŬĨŽƌ

ĐŽƉƉĞƌŝƐǁĞĂŬĚƵĞƚŽh^ŚŝŶĂ

trade tensions and a slowdown

ŝŶƚŚĞŚŝŶĞƐĞĞĐŽŶŽŵLJ͘

Ƶƚ<ďĞůŝĞǀĞƐƚŚĞůŽŶŐƚĞƌŵ

ŽƵƚůŽŽŬĨŽƌĐŽƉƉĞƌ͚ƌĞŵĂŝŶƐ

ƌŽďƵƐƚ͕͛ĂŶĚǀŝƌƚƵĂůůLJĂůůĂŶĂůLJƐƚƐ

covering the sector agree the

ĨƵŶĚĂŵĞŶƚĂůƐĨŽƌĐŽƉƉĞƌƌĞŵĂŝŶ

ƐƚƌŽŶŐ͕ǁŝƚŚƐŝŐŶŝĮĐĂŶƚůŽŶŐƚĞƌŵ

structural growth forecast for

ďŽƚŚŝƚƐĚĞŵĂŶĚĂŶĚƉƌŝĐĞ͘

dŚĞƌĞĨŽƌĞ͕ǁĞƚŚŝŶŬƚŚĞ

current dip in Antofagasta’s

ƐŚĂƌĞƉƌŝĐĞ͕ĂŶĚŝƚƐƉƌŽƐƉĞĐƟǀĞ

Ϯ͘ϳйĚŝǀŝĚĞŶĚLJŝĞůĚ͕ŵĞĂŶƐŶŽǁ

ĐŽƵůĚďĞĂŶĂƩƌĂĐƟǀĞďƵLJŝŶŐ

opportunity to gain access to the

ůŽŶŐƚĞƌŵĐŽƉƉĞƌŵĂƌŬĞƚ͘

ĚŵŝƩĞĚůLJĂůůŵŝŶŝŶŐƐƚŽĐŬƐ

ĂƌĞŚŝŐŚĞƌƌŝƐŬŝŶǀĞƐƚŵĞŶƚƐ

ĂƐĐŽŵŵŽĚŝƚLJƉƌŝĐĞƐĐĂŶďĞ

Copper is weak now, but long term it should rebound and Antofagasta is best

placed to capitalise

Buy copper giant

Antofagasta before

sentiment improves

/ƚĂůƐŽŵĂŶĂŐĞĚƚŽƌĞĚƵĐĞŝƚƐ

ĐŽƐƚƐ͕ƉƌŽĚƵĐŝŶŐĐŽƉƉĞƌĂƚΨϭ͘ςϮ

per pound in the second quarter

ŽĨƚŚŝƐLJĞĂƌĂŶĚΨϭ͘ςςƉĞƌƉŽƵŶĚ

ŽǀĞƌĂůůŝŶƚŚĞĮƌƐƚŚĂůĨ͕κ͘ϳй

ůŽǁĞƌƚŚĂŶƚŚĞĮƌƐƚƋƵĂƌƚĞƌĂŶĚ

ϭϯ͘ρйůŽǁĞƌƚŚĂŶŝŶƚŚĞĮƌƐƚŚĂůĨ

of last year.

This is down to the

ƉƌŽĚƵĐƟǀŝƚLJƉƌŽŐƌĂŵŵĞ

ŶƚŽĨĂŐĂƐƚĂŝŶƚƌŽĚƵĐĞĚŝŶϮϬϭρ͕

ƚŚŽƵŐŚŝƚ͛ƐǁŽƌƚŚŶŽƟŶŐƚŚĞ

ĮŐƵƌĞƐǁĞƌĞĂůƐŽŚĞůƉĞĚďLJĂ

ǁĞĂŬĞƌŚŝůĞĂŶƉĞƐŽ͘

tŚŝůĞƚŚĞƉƌŝĐĞŽĨĐŽƉƉĞƌŵĂLJ

ŶŽƚŝŵƉƌŽǀĞƐŝŐŶŝĮĐĂŶƚůLJďLJƚŚĞ

ĞŶĚŽĨƚŚŝƐLJĞĂƌ͕ĂŶĂůLJƐƚƐƌĞŵĂŝŶ

bullish on Antofagasta with

ŝŶǀĞƐƚŵĞŶƚďĂŶŬDKƐĂLJŝŶŐŝƚ

ůŽŽŬƐ͚ĞdžƚƌĞŵĞůLJǁĞůůƉůĂĐĞĚĨŽƌ

the second half of the year’.

ƵŶƉƌĞĚŝĐƚĂďůĞĂŶĚŵŝŶŝŶŐ

ŽƉĞƌĂƟŽŶƐǀŽůĂƟůĞ͘dŚĞƌĞĨŽƌĞ

this is not a stock for the faint-

hearted.

Antofagasta is the biggest

ƉƵƌĞͲƉůĂLJĐŽƉƉĞƌŵŝŶĞƌŽŶƚŚĞ

>ŽŶĚŽŶ^ƚŽĐŬdžĐŚĂŶŐĞ͕ĂŶĚ

operates in what is seen as a

ůŽǁͲƌŝƐŬũƵƌŝƐĚŝĐƟŽŶǁŝƚŚĂůůŽĨŝƚƐ

ŵŝŶĞƐŝŶŚŝůĞ͘

ŽŶƐŝĚĞƌĞĚďLJĂŶĂůLJƐƚƐĂƚ

ŝŶǀĞƐƚŵĞŶƚďĂŶŬ:ĞīĞƌŝĞƐĂƐƚŚĞ

lowest risk play on the copper

ƉƌŝĐĞ͕ƚŚĞĮƌŵŚĂƐĂǀŽŝĚĞĚƐŽŵĞ

ŽĨƚŚĞŽƉĞƌĂƟŽŶĂůŝƐƐƵĞƐǁŚŝĐŚ

ŚĂǀĞĚŽŐŐĞĚŽƚŚĞƌŵŝŶĞƌƐ͘

/ƚƐůĂƚĞƐƚƋƵĂƌƚĞƌůLJƉƌŽĚƵĐƟŽŶ

report was in line with

ĞdžƉĞĐƚĂƟŽŶƐ͕ĂŶĚƐŚŽǁĞĚĂŶ

ŽƉĞƌĂƟŽŶĂůůLJƐƚƌŽŶŐďƵƐŝŶĞƐƐ

ǁŝƚŚĐŽƉƉĞƌƉƌŽĚƵĐƟŽŶƌŝƐŝŶŐ

ρ͘ϯйƚŽϭεΘ͕ςϬϬƚŽŶŶĞƐĂƐĂ

ƌĞƐƵůƚŽĨŚŝŐŚĞƌƉƌŽĚƵĐƟŽŶĨƌŽŵ

ĂůůŽĨŝƚƐŵŝŶĞƐ͘

&ŽƌƚŚĞĮƌƐƚƐŝdžŵŽŶƚŚƐŽĨƚŚĞ

LJĞĂƌ͕ƉƌŽĚƵĐƟŽŶǁĂƐƵƉϮϮ͘Ϯй

because it was able to process

ŵŽƌĞĐŽƉƉĞƌĂƚĂďĞƩĞƌŐƌĂĚĞĂƚ

ŵŽƐƚŽĨŝƚƐŽƉĞƌĂƟŽŶƐ͘

ANTOFAGASTA È BUY

(ANTO) 810p

Stop loss: 648p

Market value: £7.8bn