GREAT IDEAS
22 August 2019 | SHARES | 13
700
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1050
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