South Africa’s platinum miners yesterday reached an agreement to end a five-month long labour strike – the third longest in the country’s history within that industry. However, while in this instance labour seems to have scored a victory over those who believe in the inevitable march towards increased automation investors in Anglo American (AAL) are in fact betting that its platinum operations will be employing far less people in the future. Thus, the share price has moved higher by a tenth year-to-date despite the fall seen in the price of iron ore.
As the vast majority of the outfit’s profits are provided for by a third of its assets the stock reflects investors’ faith in its ability to diversify. Wage deals like yesterday’s may provide the impetus for further diversification, away from its labour intensive underground platinum portfolio and towards open-top mines. Given that Anglo is trading at 10 times’ forecast 2016 earnings the upside from an exit may be worthwhile. Hence, in the end machines may win again, says the Financial Times’ Lex column.
Of late oil companies have been splitting off some of their North American assets, promoting divorce if you will. That has been the case at BP (BP.), Shell (RDSB) and Hess. The idea behind these so-called ‘spin-offs’ is to unlock value. In the case of the latter, in reaction to pressures from activist investors the company spun off its petrol stations sending its shares higher by a fifth. BG Group (BG.) is not up against investors of that ilk. However, it has seen a serious decline in the profitability of its Egyptian assets. The strong pound has hit its US dollar earnings too.
Even so, its stock has barely fallen, sending its valuation on a price-to-earnings basis towards 20, its highest in about a decade. The market may be perceiving some hidden value in the firm. One clear candidate is its 10bn barrels of oil equivalent in reserves. Nomura calculates that the net asset value of those is greater than that of the entire company. So should the company split its LNG and upstream assets? Only if it serves to cut the discount at which the latter are now trading and if it does not undermine the LNG business. Sometimes there is a reason to stay together, writes the Financial Times’ Lex column.
BUSINESS PRESS HEADLINES:
Bankers seized on fresh evidence that the housing market may be starting to cool to urge the Bank of England to stay its hand and refrain from widely expected curbs on mortgage lending tomorrow. The British Bankers’ Association described new data yesterday showing that mortgage approvals fell for the fourth month running as “significant” and argued that no substantive new measures were needed to take the heat out of the housing market. – The Times
The US government has moved towards lifting a 40-year ban on oil exports by allowing two companies to sell ultra-light oil to foreign buyers. Pioneer Natural Resources, of Irving, Texas, and Enterprise Products Partners, of Houston, have been told by the Bureau of Industry and Security that they can export the oil, known as condensate, which can be turned into gasoline, jet fuel and diesel. The US has a glut of oil following a fracking revolution that promises to make the country the world’s largest crude producer, ahead of Saudi Arabia and Russia. – The Daily Telegraph
Royal Bank of Scotland is expected to face shareholder attacks at its annual meeting on Wednesday after paying out £3.4bn in bonuses in the past four years. Executive pay and Scottish independence will be centre stage at the loss-making bank's meeting at its Gogarburn headquarters on the outskirts of Edinburgh. RBS, which is 80 per cent taxpayer-owned after receiving a £45bn bailout during the financial crisis, doled out £1.4bn in bonuses in 2010, with payouts falling to £576m last year, according to the Robin Hood tax campaign, which represents 115 UK organisations including Friends of the Earth and the TUC. – The Guardian
The Shard will host its first fiery shareholder meeting today as investors revolt against hefty pay packets for executives at the world’s largest advertising agency. The battle between the board of WPP (WPP), where Sir Martin Sorrell is chief executive, and investors has flared up again in advance of the company’s annual meeting to be held at the London landmark after it was revealed that he would receive total remuneration of nearly £30m for last year. – The Times
Energy companies will be offered the chance to explore for shale gas across bigger blocks of land, under a revised system aimed at enticing them to commit to fracking. Ministers are expected to launch the '14th onshore licensing round’, offering companies the chance to bid for exploration rights, within weeks. In previous licensing rounds companies would typically be awarded rights to drill over blocks spanning 100 sq km (39 sq miles) in return for committing to a plan of exploration work in the area. – The Daily Telegraph
Spire Healthcare, one of the country’s largest private hospital operators, has unveiled plans to join the stockmarket. The company, which owns 38 hospitals across the country, published its formal intention to float on the London stock exchange on Wednesday, confirming telegraph.co.uk's report on Tuesday and triggering the countdown for a share sale at the beginning of July. Spire, which has 8,000 employees, will be the first hospital chain to go public. – The Daily Telegraph
