reports
- Mathew Hodge
Morningstar | Vale’s Misfortune Priced into the Iron Ore Miners but ...
Iron ore and gold prices are flying but we don’t think either will last. Iron ore is benefiting from unusually strong demand and supply disruptions while gold is rising with negative interest rates. The global miners remain overvalued. The sector trades at an average 10% premium to our fair value estimates, versus a 20% premium three months ago. The iron ore miners--BHP, Rio Tinto, Fortescue and Vale, on average are at a 30% premium, while the rest of our coverage is only at a 4% premium. The ...
- Mathew Hodge
Vale’s Misfortune Priced into the Iron Ore Miners but Value Emerging...
Iron ore and gold prices are flying but we don’t think either will last. Iron ore is benefiting from unusually strong demand and supply disruptions while gold is rising with negative interest rates. The global miners remain overvalued. The sector trades at an average 10% premium to our fair value estimates, versus a 20% premium three months ago. The iron ore miners--BHP, Rio Tinto, Fortescue and Vale, on average are at a 30% premium, while the rest of our coverage is only at a 4% premium. The ...
- Mathew Hodge
Morningstar | Anglo American's Exposure to Iron Ore and Coking Coal Se...
As China rebalances away from infrastructure and construction-led growth, long-lagging Anglo American is better positioned than most diversified peers. The company has greater exposure to consumption-oriented commodities like platinum and diamonds (about half of revenue), which should enjoy better demand growth than investment-oriented commodities like iron ore and copper that prospered most in the past decade. Anglo's platinum business should benefit as rising household incomes bolster Chinese ...
- Mathew Hodge
Anglo American's Exposure to Iron Ore and Coking Coal Sees the Shares ...
Steel-making materials stocks, those exposed to iron ore and coking coal, have markedly outperformed our near-term expectations. The key reasons have been continued strong steel demand growth, particularly in China, and more recently, Vale’s tragic tailings dam failure and Cyclone Veronica. Iron ore supply losses this year are material, about 6% of global iron ore supply and some of that will bleed into 2020. Coking coal supply has also been impacted in the near term by increased safety inspec...
- Mathew Hodge
Morningstar | Bulk Commodities Get Another Short-Term Boost from China...
Steel-making materials stocks, those exposed to iron ore and coking coal, have markedly outperformed our near-term expectations. The key reasons have been continued strong steel demand growth, particularly in China, and more recently, Vale’s tragic tailings dam failure and Cyclone Veronica. Iron ore supply losses this year are material, about 6% of global iron ore supply and some of that will bleed into 2020. Coking coal supply has also been impacted in the near term by increased safety inspec...
- Mathew Hodge
Morningstar | Bulk Commodities Get Another Short-Term Boost from China...
Steel-making materials stocks, those exposed to iron ore and coking coal, have markedly outperformed our near-term expectations. The key reasons have been continued strong steel demand growth, particularly in China, and more recently, Vale’s tragic tailings dam failure and Cyclone Veronica. Iron ore supply losses this year are material, about 6% of global iron ore supply and some of that will bleed into 2020. Coking coal supply has also been impacted in the near term by increased safety inspec...
- Mathew Hodge
Bulk Commodities Get Another Short-Term Boost from China. Major Miners...
Steel-making materials stocks, those exposed to iron ore and coking coal, have markedly outperformed our near-term expectations. The key reasons have been continued strong steel demand growth, particularly in China, and more recently, Vale’s tragic tailings dam failure and Cyclone Veronica. Iron ore supply losses this year are material, about 6% of global iron ore supply and some of that will bleed into 2020. Coking coal supply has also been impacted in the near term by increased safety inspec...
- Mathew Hodge
Strong Demand and Supply Disruptions Boost Iron Ore and Coking Coal, b...
Near-term tightness in the iron ore market has persisted and intensified with several developments in Brazil further restricting Vale’s supply and Cyclone Veronica interrupting Pilbara shipments. We’ve factored in a further 20 million tonne reduction in Vale’s output in 2019 and 10 million tonnes in 2020. We now expect Vale to produce 350 million tonnes in 2019 and 370 million tonnes in 2020, down from an estimated 390 million tonnes in 2018. From Rio Tinto, BHP and Fortescue, we’ve lowe...
- Mathew Hodge
Morningstar | Raising our Near-Term Iron Ore Price Forecast with Addit...
Near-term tightness in the iron ore market has persisted and intensified with several developments in Brazil further restricting Vale’s supply and Cyclone Veronica interrupting Pilbara shipments. We’ve factored in a further 20 million tonne reduction in Vale’s output in 2019 and 10 million tonnes in 2020. We now expect Vale to produce 350 million tonnes in 2019 and 370 million tonnes in 2020, down from an estimated 390 million tonnes in 2018. From Rio Tinto, BHP and Fortescue, we’ve lowe...
- Mathew Hodge
Morningstar | Further Supply Disruptions to Boost Near-Term Iron Ore b...
As China rebalances away from infrastructure and construction-led growth, long-lagging Anglo American is better positioned than most diversified peers. The company has greater exposure to consumption-oriented commodities like platinum and diamonds (about half of revenue), which should enjoy better demand growth than investment-oriented commodities like iron ore and copper that prospered most in the past decade. Anglo's platinum business should benefit as rising household incomes bolster Chinese ...
- Mathew Hodge
Raising our Near-Term Iron Ore Price Forecast with Additional Supply D...
Near-term tightness in the iron ore market has persisted and intensified with several developments in Brazil further restricting Vale’s supply and Cyclone Veronica interrupting Pilbara shipments. We’ve factored in a further 20 million tonne reduction in Vale’s output in 2019 and 10 million tonnes in 2020. We now expect Vale to produce 350 million tonnes in 2019 and 370 million tonnes in 2020, down from an estimated 390 million tonnes in 2018. From Rio Tinto, BHP and Fortescue, we’ve lowe...
- Mathew Hodge
Further Supply Disruptions to Boost Near-Term Iron Ore but Declining S...
Anglo American’s adjusted net profit after tax, or NPAT, of USD 3.2 billion was flat compared with 2017 but beat our USD 3.0 billion forecast. The stronger than expected profit was underpinned by an impressive performance on costs and better profitability in the copper and diamond divisions. Adjusted EBITDA rose 5% to USD 9.2 billion primarily with higher prices which added USD 0.9 billion to EBITDA. Favourable currency moves added a further USD 0.2 billion and volumes USD 0.8 billion. Inflati...
- Mathew Hodge
Morningstar | Strong Cost Performance from Anglo American, Raising our...
Anglo American’s adjusted net profit after tax, or NPAT, of USD 3.2 billion was flat compared with 2017 but beat our USD 3.0 billion forecast. The stronger than expected profit was underpinned by an impressive performance on costs and better profitability in the copper and diamond divisions. Adjusted EBITDA rose 5% to USD 9.2 billion primarily with higher prices which added USD 0.9 billion to EBITDA. Favourable currency moves added a further USD 0.2 billion and volumes USD 0.8 billion. Inflati...
- Mathew Hodge
Morningstar | Strong Cost Performance from Anglo American, Raising our...
Anglo American’s adjusted net profit after tax, or NPAT, of USD 3.2 billion was flat compared with 2017 but beat our USD 3.0 billion forecast. The stronger than expected profit was underpinned by an impressive performance on costs and better profitability in the copper and diamond divisions. Adjusted EBITDA rose 5% to USD 9.2 billion primarily with higher prices which added USD 0.9 billion to EBITDA. Favourable currency moves added a further USD 0.2 billion and volumes USD 0.8 billion. Inflati...
- Mathew Hodge
Strong Cost Performance from Anglo American, Raising our FVE to GBX 1,...
Anglo American’s adjusted net profit after tax, or NPAT, of USD 3.2 billion was flat compared with 2017 but beat our USD 3.0 billion forecast. The stronger than expected profit was underpinned by an impressive performance on costs and better profitability in the copper and diamond divisions. Adjusted EBITDA rose 5% to USD 9.2 billion primarily with higher prices which added USD 0.9 billion to EBITDA. Favourable currency moves added a further USD 0.2 billion and volumes USD 0.8 billion. Inflati...
- Mathew Hodge
Morningstar | Vale Supply Issues and a Dovish Fed Sees Optimism Return...
The meaningful fall in resources stocks saw pockets of value emerging among the global miners in November. The S&P/ASX 200 Resources index fell 15% in less than two months. But since the end of November, shares have rallied on iron ore supply concerns and the apparent easing in the U.S. Federal Reserve’s tightening bias. The resources index is back at five-year highs. We see the greatest overvaluation among the bulk producers, particularly iron ore, which is benefiting from Vale’s disruptio...
- Mathew Hodge
Morningstar | Vale Supply Issues and a Dovish Fed Sees Optimism Return...
The meaningful fall in resources stocks saw pockets of value emerging among the global miners in November. The S&P/ASX 200 Resources index fell 15% in less than two months. But since the end of November, shares have rallied on iron ore supply concerns and the apparent easing in the U.S. Federal Reserve’s tightening bias. The resources index is back at five-year highs. We see the greatest overvaluation among the bulk producers, particularly iron ore, which is benefiting from Vale’s disruptio...
- Mathew Hodge
Vale Supply Issues and a Dovish Fed Sees Optimism Return to the Miners...
The meaningful fall in resources stocks saw pockets of value emerging among the global miners in November. The S&P/ASX 200 Resources index fell 15% in less than two months. But since the end of November, shares have rallied on iron ore supply concerns and the apparent easing in the U.S. Federal Reserve’s tightening bias. The resources index is back at five-year highs. We see the greatest overvaluation among the bulk producers, particularly iron ore, which is benefiting from Vale’s disruption...
- Mathew Hodge
Morningstar | Long-Term Assumptions for Anglo American Reviewed and FV...
We’ve reviewed our long-term assumptions for no-moat-rated Anglo American after a recent investor update. We retain our GBX 1,150 per share fair value estimate with the positives and negatives offsetting each other. The several positive changes include the proposed expansion of the Collahuasi copper mine, stronger volume guidance for diamonds and coking coal, a reduction in our forecasts for platinum costs and the lower GBP/USD exchange rate. However, the negatives were lower forecast volumes ...
- Mathew Hodge
Morningstar | Bulk Commodity Prices Defying Longer-Term Risks and Majo...
We still see significant risks for the miners and think the stocks overall are overvalued. Buoyant commodity and share prices do not reflect the inevitable shift in China’s economic growth toward less commodity-consuming activities, and the market has taken too much comfort from the stimulus-fuelled recovery. The underlying sources of instability--poor-quality lending in China and growing leverage are yet to be addressed. We see the greatest overvaluation among the bulk miners--those exposed t...
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