Overview
Glencore Plc (GLEN) is among the world’s leading diversified natural resource companies, engaged in the business of production and distribution of minerals and metals, crude oil and oil products, coal and agricultural products. The company currently operates in more than 50 countries and has an employee base of 158,000, including contractors. The company is currently managing over 150 mines across the globe.

Recent News
The company recently announced the retirement of Alex Beard, the company’s head of oil. Alex Sanna, the company’s head oil Marketing, will overtake the responsibilities of Mr Beard. Mr Peter Freyberg also appointed as Industrial Assets head at Glencore.

Financial Highlights – Financial Year 2018 ($, million)

(Source: Annual Report, Company Website)
 
In the financial year ending 31 December 2018, the company’s reported revenue was $219,754 million as compared to $205,476 million for the same period of last year. There was an increase of 6.95 per cent due to an increase in the revenue from geographic regions of the Americas, Europe, Asia and Africa. The company’s Adjusted EBITDA for FY2018 stood at $15,767 million as compared to $14,545 million in FY2017. The Adjusted EBIT increased by 8 per cent to $9,143 million for the FY2018 as compared to $8,459 million in FY2017. The company’s Income before tax for FY2018 stood at $4,679 million as against $6,921 million for FY2017. The Income for the year stood at $2,616 million in FY2018 as compared to $5,162 million in the FY2017. The company’s basic earnings per share stood at US$ 0.24 in FY2018 as compared to US$ 0.41 in FY2017. The company’s diluted earnings per share for FY2018 stood at US$ 0.24 as compared to US$ 0.40 in FY2017.

Share Price Performance

Daily Chart as at July-05-19, before the market closed(Source: Thomson Reuters)

On July 05, 2019, at the time of writing (before the market closed, at 10:51 AM GMT), Glencore Plcshares were trading at GBX 270.00 and down by 0.99 per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 343.90 /GBX 249.75.

Valuation Methodology


Conclusion
The company has shown good top-line performance in the current financial year. The company restarts its Katanga’s processing operations and zinc mining at Lady Loretta (Mount Isa) and post-acquisition, HVO and Hail Creek contributed positively for the company. In the FY2019, the company is focusing entirely on the retention and attraction of human resources. The company launched the Corporate Scholarship Programme to train mining engineers that will improve the company’s production capacity and quality.

Based on the decent growth prospects and supported by the valuation as done above, we have given a “BUY” recommendation at the closing price of GBX 272.70 (as on 4th July 2019) with single-digit upside potential based on 11.30x NTM Price/Earnings (approx.) on FY19E earnings per share (approx.).
 
*All forecasted figures and Peer information have been taken from Thomson Reuters. Currency exchange rate taken for 1 USD = 0.79596 GBP.
*The “BUY” recommendation is valid for the current price as covered in the report (as on 5^th July2019).

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