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Chilean copper miner Antofagasta beat market expectations once again with these results, primarily on the back of strong copper prices. A strong molybdenum price and a greater volume of molybdenum sold was also a factor.
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Cost pressures remain key for the company but, so far, Antofagasta has managed to keep on budget at all three of its mines in the face of industry-wide price hikes. In fact, the company is proving to be a veritable cash machine, generating net cash flow from operating activities of $977m in the period - and that's including a $363m income tax payment. Net cash has now pushed through the $1.5bn mark, hence the company's increasing propensity to go on the acquisition trail and to pay special dividends. It's also expanding operations at the flagship Los Pelambros mine, although for the current period, a fall-off in grades will lead to a 9,000-tonne reduction in anticipated output to 312,000 tonnes.
Broker Seymour Pierce forecasts sales of $3.9bn for the full-year, giving pre-tax profits of $2.79bn and EPS of 144c. Analysts expect a large special dividend at the end of the year, possibly in the region of 40c.
| Antofagasta (ANTO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 678p | MARKET VALUE: | £ 6,684m | |
| TOUCH: | 677-679p | 12-MONTH HIGH: | 763p | LOW: 405p |
| DIVIDEND YIELD: | 0.6%* | PE RATIO: | 9 | |
| NET ASSET VALUE: | 351¢ | NET CASH: | $1.54bn | |
| Half year to 30 Jun | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (US¢) | Dividend per share (US¢) |
|---|---|---|---|---|
| 2006 | 1.85 | 1.33 | 66.2 | 3.20* |
| 2007 | 1.94 | 1.44 | 73.9 | 3.20* |
| % change | +5 | +8 | +12 | - |
| Ex-div: 19 Sep | ||||
| Payment: 11 Oct | ||||
| *excludes special dividends | ||||
| £1=$2.0 | ||||
Antofagasta's shares have done well since our buy recommendation at 506p (10 November 2006). But despite that, as well as the somewhat less favourable macroeconomic outlook, the shares still look good value.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
