汇丰银行全球金属与采矿业基础与散装矿工化妆舞会20192457页

Disclosures&DisclaimerThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.Issuerofreport:HSBCSecurities(SouthAfrica)(Pty)LtdViewHSBCGlobalResearchat:THISCONTENTMAYNOTBEDISTRIBUTEDTOTHEPEOPLE'SREPUBLICOFCHINA(THEPRC)(EXCLUDINGSPECIALADMINISTRATIVEREGIONSOFHONGKONGANDMACAO)Inthisreportweshowwhydespitesomeinterestingparallels,theminers’attempttomaskthemselvesasutilitiesisunlikelytolastInvestorswouldrathertheindustry“stayedbehinditsmask”,asglobaluncertaintykeepsriskappetitesubduedWeseevalueinthesector,butESGriskisontherise:WeadjustTPsby-8%to+1%,downgradeASR,EXX&KAZtoHoldfromBuyandleaveallotherratingsunchangedIncostume:Theminingsectoristryingtobesomethingitisnot.Pressurefrominvestorscontinuestocallforunbalancedcapitalallocation,favouringcashreturnstoshareholders.Asaresult,theindustryfindsitselfatamasqueradeball,tryingtodressuplikearelativelylowriskutility,withlowlevelsofinvestmentandrisingdividendyields.Theparty-goersdonothoweverfullybelievethedisguise,asthedeclineinvaluationmultiplessuggestsmoreriskthanthesectorwouldliketoadmit.It’safragilebalancefornow,asourcommoditiesworkcontinuestopointtomaterialdeficitsopeningupinstrongmarketsifunderinvestmentcontinues.Miningremainsacapital-intensiveindustry,andhencewhenthecycleturns,itspresentpseudo-utilitynaturewillrapidlydissolve,inourview.Weseevaluebutinvestorsneedconfidence:WithfiveBuyratings,sixHoldsandoneReduce,weremainmodestlyconstructiveonthesector.Butwebelieveinvestorsfindthemselvesinanunenviablepositionwherenooneisconfidentenoughtomakethefirstmajormove,favouringmomentumoverconviction.GlobaluncertaintyandESGrisk(inthewakeofVale’stailingsdamfailure)areontherise.Playingtheminersinthisenvironmentisdifficult.Webelieve,however,itisnearingtimefortheminingindustrytotakeoffitsmaskandbegintomakeresponsibleinvestmentinselect,strongercommoditymarkets.Thisiswhererealvalueiscreated,throughnewhighqualityprojects,inmarketswithrobustfundamentals,withpropertechnicalstewardshipandgovernance.Theclockistickingtowardsanewcycle.Updatingournumbers:WehaveincludednewpriceandFXforecastsfromourlatestMetalsQuarterly(22January2019)reportforstocksnotyetupdated.WeadjustTPsby-8%to+1%,downgradeEXX&KAZtoHoldandleaveallotherratingsunchanged.4February2019DerrynMaade*Analyst,Metals&MiningHSBCSecurities(SouthAfrica)(Pty)[e-mail][phone]JonathanBrandt,CFASrAnalyst,LatAmMetals&Mining,Pulp&PaperHSBCSecurities(USA)[e-mail][phone]FawziHanano*Metals&[e-mail][phone]MarianoSzachtman*Analyst,LatAmMetals&Mining,Pulp&[e-mail][phone]AdamDickens*[e-mail][phone]*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulationsBase&BulkMinersEQUITIESMETALS&MININGGlobalKeychangestoratingsandtargetpricesCurrent______TP_________Rating___Upside/Marketcap3mADTVCompanyTickerCurrencypriceOldNewOldNewdownside(USDm)(USDm)AngloAmericanAALLNGBPp1,8512,1202,100BuyBuy13.4%34,196201BHPBLTLNGBPp1,6301,7751,800HoldHold10.4%116,319283GlencoreGLENLNGBPp297450410BuyBuy38.0%54,509294RioTintoRIOLNGBPp4,0784,7804,780BuyBuy17.2%90,356400South32S32LNGBPp185220220BuyBuy18.9%12,2937ValeVALEUSUSD11.4813.2513.25HoldHold15.4%59,244736AntofagastaANTOLNGBPp821720720HoldHold-12.3%10,64151KazMineralsKAZLNGBPp579600600BuyHold3.6%3,58221AfricanRainbowARISJZAR145200190BuyBuy30.8%2,3676AssoreASRSJZAR319370360BuyHold12.9%3,2701KumbaKIOSJZAR305225225ReduceReduce-26.1%7,2026ExxaroEXXSJZAR148180165BuyHold11.6%3,89711Source:RefinitivDatastream,HSBCestimates.Pricedasofcloseat29January2019ThemasqueradeballEQUITIES●METALS&MINING4February20192Figure1:HSBCglobalminersvaluationtable1.Ratioshavebeencalendarised2.CompaniescoveredbyHSBCaredenotedby*.ForHSBCcoveredcompanies,ratiosarebasedonHSBCestimates.Foruncoveredcompanies,ratiosarebasedonRefinitivDataStream,I/B/E/Sestimates.3.GlobalaverageoneachmultipleexcludeChinaA-Sharestoavoiddoublecounting4.Lastpriceasofcloseof29January2019Companies2BBGLastTargetHSBCMarketCapCodeCcyPricePriceRatingUSDm2018e2019e2018e2019e2018e2019e2018e2019e2018e2019e2018e2019eDiversifiedAngloAmerican*AALLNGBP18.5121.00Buy34,1969.88.61.31.24.74.44.1%4.6%14%15%16%18%BHPBilliton*BHPLNGBP16.3018.00Hold118,13011.611.02.22.25.65.48.5%9.6%18%20%6%23%ExxaroResources*EXXSJZAR147.94165.00Hold3,8975.56.50.80.82.94.09.6%7.9%21%16%8%2%Glencore*GLENLNGBP2.974.10Buy54,5098.47.91.11.05.34.75.2%6.3%13%14%19%23%RioTinto*RIOLNGBP40.7847.80Buy91,35610.410.72.12.05.55.25.6%6.8%20%19%13%14%VedantaLtd.*VEDLININR194.10290.00Buy10,0627.26.21.11.03.83.06.6%5.9%15%16%24%31%TeckResourcesTCKUSUSD23.30NRNR13,4147.08.10.80.73.63.70.8%0.7%13%10%nmnmVale*VALEUSUSD11.4813.25Hold59,2449.05.71.31.24.64.25.6%7.3%15%22%13%16%South32*S32LNGBP1.852.20Buy12,2939.911.71.11.13.94.44.8%3.5%12%10%10%9%AfricanRainbow*ARISJZAR1