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JP morgan
Our Take - strong vs low expectations: Q4’23 production is a beat vs JPMe in all divisions: Copper is +2% vs JPMe, Iron Ore +9%, Met Coal +10%, Diamonds +20%, PGMs +20%. However, this is unlikely to come as a surprise given the proximity to Anglo American’s Dec’23 Investor Update, which introduced significant downgrades to 2024-25 production guidance. Most noteworthy in today’s release is an indication of forthcoming asset impairments at De Beers and at Barro Alto (Nickel) due to weak market conditions and prices. This implies potential downside risk to market valuations for De Beers: De Beers’ reported capital employed at Jun’23 was $7.2bn, which is comparable to JPM’s base case Dec’25 equity valuation for De Beers of $6.8bn, which reflects our prediction for a recovery in diamond markets to $910m/$1.2bn EBITDA in FY’25/26 vs our forecast -$147m EBITDA for De Beers in H2’23. Investor sentiment for Anglo’s investment case remains gloomy in our experience, as reflected by a 21% share price fall since the Dec’23 Investor Update, including a 3.7% fall ahead of today’s release. Anglo American trades on spot 4.1x/3.7x EV/EBITDA 2024E/25E, 6%/9% FCF yield. We are Overweight.