Anglo American PLC

Anglo American PLC is an FTSE 100 listed Mining Company with operations in Australia, Southern Africa, South America, and North America, and is headquartered in London, United Kingdom.

Investment Rationale – SELL at GBX 2,814.50

• Profit Booking: AAL has managed to breach R1 levels provided in the latest “Buy” report released on 15 July 2022, which is giving a profit booking opportunity ahead of Federal Reserve’s meeting this week.
• Decrease in EBITDA: The Company has witnessed a year-on-year decline of around 32% in EBITDA during H1 FY22 because of lower production volumes.
• Decline in Production Volumes during Q2 FY22: AAL had shown a year-on-year decline in most of the commodities like Diamond, Copper, Nickel, Platinum group metals, Iron ore, and Steelmaking coal during Q2 FY22. Moreover, the overall production remained 9% lower when compared with an equivalent period of the prior year.
• Trimmed Guidance: The Company has trimmed FY22 production guidance for steelmaking coal because of longwall ramp-up timing.

One Year Share Price Chart  

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

Conclusion

Based on the decent notional gains, macroeconomic challenges, decline in production volume during Q2 FY22, coupled with the unfavorable valuation conducted above, a "SELL" recommendation on Anglo American PLC has been given at the current market price of GBX 2,814.50 (as of 26 July 2022, at 08:26 PM GMT+1).

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 26 July 2022. 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 scenarios.

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

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