Tuesday, 31 July 2012 - 20:00
Charts
Anglo American Two weeks back we highlighted BHP Billiton. Last week Anglo American posted their interim results to the end of June and the share price which had been dropping, fell even further on the news.
The financial results of these large diversified miners is a type of barometer of what is happening in the global economy, especially the strength of that still largely unknown quantity, China. This is because Anglo is involved across a number of base metals including iron ore, metallurgical (used for steel making) and thermal coal (used for power generation), copper, nickel, and platinum. It is also involved in diamonds via their stake in De Beers.
The results were worse than analysts had expected and while a company will always try and put a positive spin on its numbers, over time growth in earnings and return on equity are the main factors in driving up the value of the company and hence its price. In the case of Anglo, they highlighted volume growth especially the record production of iron ore, via their majority stake in Kumba Iron Ore but noted that output from its Brazilian iron ore project would be delayed by at least a year. Because prices of commodities have been declining and a company such as Anglo American is essentially a price taker, its operating profit fell a massive 38% to $3,7 billion from a previous $6 billion.
The table below gives a clear indication of the various areas that Anglo is involved in and the decline in operating earnings from the previous 6 months to June 2011 across all product lines, except other.
Table 1: Analysis of Operating Profit
Source: Anglo American
Price relative
There are numerous ways that analysts assess the value of a company. Essentially the price today will be the discounted sum of all expected future earnings, but because investment professionals also need to make relative decisions, one way is to assess the PE relatives. While there is merit in certain companies trading at higher PE’s than others, over time certain relationships can be identified.
For example since 1982 Anglo American’s PE has traded at 90% of the JSE PE. It traded as low as 53% in 2009 and after recovering fell back to 57% but with the poor results, the PE trades at 77% of the market.
Chart 1: PE relative of Anglo American to the FTSE/JSE
Source: I-Net
When comparing the PE ratio to the well-loved SAB Miller, which has been getting more and more expensive, then a larger discrepancy is apparent. The relative PE’s between these two shares reached a low of just 27% - now at 40%.
Chart 2: PE relative of Anglo American to SABMiller
Source: I-Net
The share price hit a high of over R550 four years ago. It fell to a low of R139 in March 2009 at the peak of the financial crisis and while it has recovered to its current R246 it’s been a sideways and rather disappointing investment.
The price certainly looks cheap, and assuming earnings come in at R30 for the full year, the price to earnings ratio comes in just over 8 times. In terms of market capitalisation of shares listed on the JSE, Anglo has slipped to the 4th largest with a market cap of R346 billion after BAT, SAB Miller and Billiton which has a market cap of R520 billion.
It definitely does appear that some of the smarter money is starting to accumulate this share at these lower prices. This is happening while cyclical shares such as Anglo American have disappointed on their earnings and also when global investors favour the more consumer non cyclicals such as SAB Miller. Time will tell which will make the best investment from these levels.
Kind regards
Ian de Lange
www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966
Tue, 31 Jul 2012
Top News
South Africa's All-Share index opened on Tuesday at a record high as platinum miner Wesizwe and other commodity and industrial stocks rose on hopes of further moves by Europe to manage its debt woes. Full story
South Africa's rand was steady and range-bound against the dollar in early Tuesday trade with investors unwilling to take big positions ahead of the release of trade and employment numbers at home and a U.S. monetary policy meeting abroad. Full story |
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Syrian combat aircraft
and artillery pounded two areas of Aleppo on Tuesday as the army
battled for control of the country's biggest city, but rebel
fighters said troops loyal to President Bashar al-Assad had been
forced to retreat. Full storyNear-bankrupt Greece is fast
running out of cash while it waits for its next installment of
aid from international lenders, a deputy finance minister said
on Tuesday, sounding the alarm on the country's precarious
financial position. Full storyRepublican Mitt Romney's
campaign tried to keep the domestic political focus on the U.S.
economy and jobs on Monday, although the effort was overshadowed
by more controversy from a foreign trip after he made remarks
that upset Palestinians. Full story |
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Markets | U.S. stocks edged lower on
Tueday as investors awaited the outcome of the Federal Reserve
Board's two-day meeting when it is widely expected. . . Full story | | European shares suffered their
biggest intraday fall in more than a week on Tuesday, hit by
weak bank results and fresh doubts over. . . Full story | | U.S. stocks were mixed on
Tuesday while European shares snapped a three-day winning streak
and oil slipped on fear central banks may not. . . Full story | | Britain's FTSE fell on Tuesday
extending earlier losses, weighed by worries the European
Central Bank may not deliver enough stimulus this week to. . . Full story |
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| Gold steadied on Tuesday in line
with the euro as investors took to the sidelines ahead of this
week's European Central Bank meeting,. . . Full story | | U.S. stocks opened flat on
Tuesday ahead of the start to a two-day policy meeting by the
U.S. Federal Reserve at which the. . . Full story | | A three-day rally in European
shares halted on Tuesday, dented by concerns that markets have
overplayed the chances of the European Central Bank. . . Full story | | Japan's Nikkei share average
logged its worst July performance in five years on concerns
about a deepening euro zone crisis and slowing global. . . Full story |
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| South Africa's government bonds weakened slightly in late Tuesday trade and yields edged up after the Treasury said it would increase. . . Full story | | Zimbabwe has increased minimum capital requirements for banks to as much as $100 million, a move which could hold back a. . . Full story | | South Africa's three top gold producers are expected to report lower quarterly earnings despite increased output after a one-off boost in. . . Full story | | South Africa imported no crude oil from Iran in June, customs data showed on Tuesday, a sign Pretoria may be cutting. . . Full story |
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| South Africa's trade deficit narrowed to 5.7 billion rand in June from an 8.9 billion rand shortfall in May, the South African Revenue Service said on Tuesday.. . . Full story | | South Africa's unemployment rate slowed slightly in the second quarter but remained high, official data showed on Tuesday, with key sectors like manufacturing still shedding jobs as the global economic downturn. . . Full story | | Petra Diamonds Ltd said full-year production nearly doubled mainly due to the contribution from its Finsch mine, and that it would sell its fissure mine operations in South Africa to focus. . . Full story |
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Company News | Anglo notes the announcement made by the Government of the Republic of Botswana ("GRB") in relation to its decision not to. . . Full story | | Shareholders are advised that, with the exception of ordinary resolution number four which was withdrawn, shareholders approved all of the ordinary. . . Full story | | Shareholders are advised that Cadiz' integrated annual report, containing the group's condensed annual financial statements for the year ended 31 March. . . Full story | | Shareholders are advised that at the annual general meeting of MICROmega held at 10:00 on Tuesday, 31 July 2012 (in terms. . . Full story |
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| Sasfin shareholders were advised that Sasfin Bank Ltd. (''Sasfin Bank''), a wholly owned subsidiary of Sasfin has secured a term loan. . . Full story | | Shareholders of Italtile Ltd. ("Italtile") and Ceramic were advised to continue to exercise caution when dealing in their respective Italtile and. . . Full story | | Italtile Ltd. ("Italtile") and Ceramic shareholders were referred to the cautionary announcements published on SENS on Monday, 28 May 2012 and. . . Full story | | Shareholders are advised that AFGRI Operations, a wholly owned subsidiary of the company, and Senwes have entered into binding sale of. . . Full story |
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Company Results | Revenue for the interim period lowered to R3.2 billion (2011: R3.4 billion). Gross profit shot up to R324.5 million (2011: R239.8. . . Full story | | Gold One announced the company's June 2012 quarter results, whose highlights were:
*Cashflow from operations increased by 58%
*Group operating cashflow. . . Full story | | Outlook
Capco has continued to drive performance across its estates during 2012, and this has been reflected in the financial results.
The balance. . . Full story | | Rental revenue for the interim period ended 30 June 2012 jumped to R1.1 billion (2011: R758.6 million), while profit for the. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 34596.00 | -361.00 | -1.03% | JSE Top 40 | 17:00 | 30386.00 | -388.00 | -1.26% | JSE Gold | 17:00 | 2410.00 | -16.00 | -0.67% | JSE Financial | 17:00 | 26548.00 | -406.00 | -1.51% | JSE Industrial | 17:00 | 40341.00 | -432.00 | -1.06% | JSE Indust 25 | 17:00 | 34296.00 | -463.00 | -1.33% | JSE Resource | 17:00 | 46291.00 | -308.00 | -0.66% | DJ Futures | 19:48 | 12980.00 | -53.00 | -0.41% | DJ Ind | 20:00 | 13039.18 | -36.48 | -0.28% | SP 500 | 20:00 | 1381.78 | -4.19 | -0.30% | Nasdaq | 20:00 | 2946.18 | -11.91 | -0.40% | FTSE 100 | 17:35 | 5635.28 | -58.35 | -1.02% | DAX | 18:08 | 6772.26 | 82.86 | 1.24% | CAC40 | 18:08 | 3291.66 | -29.05 | -0.87% | Nikkei | 08:08 | 8695.06 | 59.62 | 0.69% | Shanghai | 09:28 | 2103.63 | -6.28 | -0.30% | Hang-Seng | 10:28 | 19796.81 | 211.41 | 1.08% | All Ords | 08:43 | 4289.40 | 22.50 | 0.53% | NZSE 50 | 07:48 | 3545.01 | 26.12 | 0.74% |
| | Name | Time | RP | Move | % Move | Gold $ | 19:59 | 1613.63 | -8.17 | -0.50% | Gold R | 19:58 | 13322.19 | 49.37 | 0.37% | Gold R/kg | 20:00 | 428309 | 3474 | 0.82% | Silver $ | 19:59 | 27.9730 | -.1570 | -0.56% | Platinum $ | 19:59 | 1413.00 | 2.50 | 0.18% | Palladium $ | 19:59 | 588.10 | 1.70 | 0.29% | R157 | 17:02 | 5.50 | .12 | 2.23% | R204 | 17:02 | 6.23 | .11 | 1.80% | Brent Crude | 20:00 | 106.07 | -1.31 | -1.22% | Rand / Dollar | 19:59 | 8.2530 | 0.0699 | 0.85% | Rand / Pound | 19:55 | 12.9057 | 0.0725 | 0.56% | Rand / Euro | 19:55 | 10.1575 | 0.1194 | 1.19% | Rand / NZD | 19:58 | 6.6936 | 0.0805 | 1.22% | Rand / AUD | 19:55 | 8.6830 | 0.0895 | 1.04% | Yen / Dollar | 19:59 | 78.1620 | -0.0010 | 0.00% | Euro / Dollar | 19:55 | 0.8121 | -0.0036 | -0.44% | Dollar / Euro | 19:59 | 1.2305 | 0.0050 | 0.41% | Pound / Dollar | 19:55 | 0.6375 | 0.0010 | 0.16% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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31/07/2012 | 143 | 188 | 79 | 410 | 210,461,575 | R12,540,322,411 | 122868 | 1373209 | 30/07/2012 | 208 | 143 | 80 | 431 | 178,431,641 | R10,034,198,755 | 90308 | 1297390 | 27/07/2012 | 237 | 126 | 74 | 437 | 238,758,843 | R12,988,361,188 | 113099 | 1508113 | 26/07/2012 | 166 | 145 | 93 | 404 | 218,153,435 | R11,180,530,966 | 96232 | 1577704 | 25/07/2012 | 176 | 165 | 86 | 427 | 213,599,120 | R10,062,247,907 | 94521 | 1498965 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 30,386.00 | -388.00 | -1.26% | Industrial | 40,341.00 | -432.00 | -1.06% | Mid Cap | 50,905.00 | 28.00 | 0.06% | Small Cap | 36,946.00 | 26.00 | 0.07% | Resource 20 | 46,291.00 | -308.00 | -0.66% | Industrial 25 | 34,296.00 | -463.00 | -1.33% | Financial 15 | 9,903.00 | -193.00 | -1.92% | Financial & Ind. 30 | 37,753.00 | -599.00 | -1.56% | All Share | 34,596.00 | -361.00 | -1.03% | Oil & Gas | 26,072.00 | -242.00 | -0.92% | Mining | 29,842.00 | -182.00 | -0.61% | Gold Mining | 2,410.00 | -16.00 | -0.67% | Platinum Mining | 47.00 | .00 | -0.15% | GENERAL MINING | 7,616.00 | -31.00 | -0.41% | Oil & Gas Producers | 14,018.00 | -130.00 | -0.92% | Basic Materials | 25,567.00 | -196.00 | -0.76% | Chemicals | 14,709.00 | -447.00 | -2.96% | Forestry & Paper | 13,599.00 | -29.00 | -0.21% | Industrial Metals | 27,475.00 | -1016.00 | -3.57% | Industrials | 34,667.00 | 327.00 | 0.95% | General Industrials | 98.00 | 1.00 | 1.20% | Consumer Goods | 34,645.00 | -444.00 | -1.27% | Automobiles & Parts | 5,661.00 | -82.00 | -1.44% | Household Goods | 161.00 | -2 | -1.41% | Health Care | 48,577.00 | 330.00 | 0.68% | Beverages | 121.00 | .00 | -0.48% |
| | Index Name | RP | Move | % Move | Food Producers | 63,502.00 | -367.00 | -0.57% | Personal Goods | 465.00 | -11.00 | -2.45% | Consumer Services | 71,618.00 | -1138.00 | -1.57% | General Retailers | 62,485.00 | -577.00 | -0.92% | Travel & Leisure | 3,930.00 | 32.00 | 0.84% | Media | 98.00 | -2.00 | -2.07% | Support Services | 2,273.00 | 2.00 | 0.09% | Telecommunications | 71,292.00 | -1289.00 | -1.78% | Financials | 26,548.00 | -406.00 | -1.51% | Banks | 49,205.00 | -1206.00 | -2.39% | Non-life Insurance | 41,856.00 | 128.00 | 0.31% | Life Insurance | 20,990.00 | -263.00 | -1.24% | General Financial | 2,469.00 | -19.00 | -0.80% | Technology | 29,854.00 | -123.00 | -0.41% | SHARIAH TOP40 | 2,953.00 | -30 | -1.01% | FTSE/JSE SHARIAH ALL | 3,090.00 | -26 | -0.84% | COAL MINING | 21,901.00 | -417 | -1.87% | FTSE JSE Fledgling | 5,536.00 | 12 | 0.22% | FTSE/JSE Alt X | 1,072.00 | 1 | 0.10% | SA LISTED PROPERTY | 485.00 | | -0.40% | CAPPED PROPERTY | 383.00 | | -0.19% | RESOURCE | 25,588.00 | -168 | -0.65% | DIVIDEND PLUS | 194.00 | 0 | 0.23% | FTSE/JSE RAFI 40 | 7,067.00 | -74 | -1.04% | Capped Top 40 | 16,045.00 | -208 | -1.28% | Capped All Share | 17,502.00 | -182 | -1.03% | JSE TABACO | 5,606.00 | 10 | 0.19% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | NPN | NASPERS LIMITED | BUY | 26 Jul | SNT | SANTAM LTD | HOLD | 25 Jul | BTI | BRITISH AM. TOBACCO PLC | BUY | 25 Jul | RMI | RAND MERCH INS HLDGS LTD | HOLD | 25 Jul | AFE | A E C I LIMITED | BUY | 25 Jul |
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Results Expected** Expected | Company Name | Fin. Date | 01 Aug 2012 | EXXARO | June 2012 (Interim) | 01 Aug 2012 | NEDBANK | June 2012 (Interim) | 02 Aug 2012 | CAPITAL | June 2012 (Interim) | 02 Aug 2012 | LIB-HOLD | June 2012 (Interim) | 02 Aug 2012 | LIBHOLD-P | June 2012 (Interim) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | ANGLO | 12-07-27 | 12-08-10 | 12-09-13 | R 0.3200 | ABSA | 12-07-27 | 12-08-31 | 12-09-10 | R 3.1500 | ABSABANK-P | 12-07-27 | 12-08-31 | 12-09-10 | R 31.3470 | CAPSHOP | 12-07-26 | 12-10-12 | 12-11-20 | R 0.0500 | NAIL -N- | 12-07-26 | 12-08-10 | 12-08-20 | R 0.0912 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | SBR003 | 12-07-13 | 12-07-27 | 12-08-06 | R 1.4800 | VILLAGE | 12-06-21 | 12-07-27 | 12-08-06 | R 0.3000 | FOORDCMPS | 12-07-10 | 12-07-27 | 12-08-06 | R 0.3000 |
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Upcoming AGMs** Code | Company Name | Date | Status | ERBP | Erbacon Investment Holdings Ltd. | 31/07/2012 | Confirmed | ERB | Erbacon Investment Holdings Ltd. | 31/07/2012 | Confirmed | MMG | MICROmega Holdings Ltd. | 31/07/2012 | Confirmed | LHG | Litha Healthcare Group Ltd. | 31/07/2012 | Confirmed | MML | Metmar Ltd. | 01/08/2012 | Confirmed |
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