Antofagasta PLC  

Antofagasta PLC (LSE: ANTO) is an FTSE 100 index listed Company engaged in copper mining. It operates four copper mines in Chile. Besides, the Company has a transport division as well in Northern Chile, to serve mining customers. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Investment Rationale – Sell at GBX 1,538.00

• Resistance near Current levels: ANTO’s stock price almost touched the Resistance (R1) which was stated in the previous report on 11 October 2023 and might witness some sell-off from the current levels. Considering the market conditions and the price action, it is prudent to exit the stock, as the prices might pull back from these levels.
• Longer Cash Conversion Cycle: The company is inefficient in converting the inventory into cash, and in H1 FY23 the group is taking 189.3 days to convert its inventory into cash, which is higher than the industry median of 80.6 days.
• Declining liquidity ratios: The group’s quick ratio for H1 FY23 was reported at 2.18x, which is lower than 2.78x during pcp. Further, ANTO’s current ratio declined to 2.67x during H1 FY23, against 3.37x in H1 FY22.
• Expensive Valuation: The stock of ANTO is currently offered at 3.2x on EV/ Sales based relative valuation (NTM) as compared to the industry (Basic Materials) median of 1.0x. On EV/EBITDA-based relative valuation (NTM), the stock is valued at 6.1x which is higher than the industry median of 5.3x.

Share Price Chart  

Conclusion

Based on the notional gains, macroeconomic challenges, and price action stance, a "SELL" recommendation on JD Antofagasta PLC (LSE: ANTO) has been given at the closing market price of GBX 1,538.00 (as of 12 December 2023).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 12 December 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.