JPMorgan reiterates ‘overweight’ on Anglo American
Sharecast
Published Nov 15, 2023 13:41
Updated Nov 15, 2023 14:11
JPMorgan reiterates ‘overweight’ on Anglo American
Sharecast - JPM (NYSE:JPM) said the acquisition underscores Anglo’s discount to peers and opportunity to crystallise value.
"For Anglo American (JO:AGLJ), although this likely removes Glencore (LON:GLEN) as a potentially interested party in AAL's Met Coal assets, it underscores our belief that further met coal M&A is likely if the steel sector views coking coal supply security as a critical long-term concern," the bank said.
"It also highlights a potential opportunity for AAL to crystallise value through further reducing its coal exposure (thermal coal exited in 2021)."
JPM estimated that Anglo’s sum-of-the-parts discount of around 24% widens to 34% if it values its Met Coal segment at 5.5x EV/EBITDA.
"Furthermore, we estimate AAL is trading at a material discount to peers on 2024/25E spot EV/EBITDA of 3.4x/3.1x, versus its diversified peers on around 4x.
"Thus, we still see Anglo as offering an inexpensive valuation versus peers with self-help potential & a better near-term turnaround opportunity."
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