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Investment Thesis, Valuation and Risks
Anglo American (Overweight; Price Target: 2,450p)
Investment Thesis
We rate Anglo American Overweight. Anglo offers highly diversified commodity exposure across copper, iron ore, PGMs, diamonds, nickel and coal. It has the highest growth pipeline of the UK diversified miners, specifically in new copper and PGM capacity. Anglo trades at a significant discount to the sum of its parts, and the market value of its portfolio net of its listed stakes in Amplats and Kumba (i.e. the “Rump”) is undervalued vs global mining peers, in our view. Anglo’s balance sheet is comfortable and its dividend yield is comparable to other European Mining peers despite its growth spend.
Valuation
Our Dec-25 price target is set as an average of 1) 0.9x P/NPV and 2) 6.0x 2025E EV/ EBITDA. Within our valuation, we value Anglo Platinum at our JPM published fair value, calculated as an average of 0.9 NPV and 5.5x 2025E EV/EBITDA. Similarly, we value Kumba at our JPM published fair value, calculated as an average of 0.9x NPV and 5.0x 2025E EV/EBITDA. Our NPV is based on a sum-of-the-parts DCF valuation using a 10.5% discount rate, rounded to the nearest 50p.