Nomura Securities on Global Metals/Mining: Fear Driving Divergence Between Sentiment and Mining Valuation Fundamentals
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Rating Summary:
8 Buy, 6 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 24 | New: 24
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Nomura Securities on Global Metals/Mining: Fear driving divergence between sentiment and mining valuation fundamentals
Analyst, Patrick Jones, said, "Volatility in commodity prices may continue, yet mining equities are already pricing in further falls: Eurozone debt concerns and Chinese slowdown concerns have driven sentiment and commodity volatility over the past six months. Yet, commodity prices have not collapsed, and miners are producing at capacity. The diversified miners are now trading at valuations near their global financial-crisis lows (~0.6x NPV and 2012E EV/EBITDA of ~4x), but with repaired balance sheets and growth catalysts on the horizon."
Preferred Stocks – XTA for copper and RIO for iron ore, BHP remains a cornerstone of any portfolio
"Nomura has resumed coverage of BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RIO) with both stocks rated Buy (TPs GBP 25 & GBP 50, respectively). Xstrata (OTC: XSRAY) and Rio Tinto are preferred among the diversified miners. Xstrata offers leveraged exposure to copper and thermal coal, while Rio Tinto offers both quality and growth to iron ore. We regard BHP as remaining a core holding, offering high-quality assets, low cost operations, and growth to the wider resources sector."
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Analyst, Patrick Jones, said, "Volatility in commodity prices may continue, yet mining equities are already pricing in further falls: Eurozone debt concerns and Chinese slowdown concerns have driven sentiment and commodity volatility over the past six months. Yet, commodity prices have not collapsed, and miners are producing at capacity. The diversified miners are now trading at valuations near their global financial-crisis lows (~0.6x NPV and 2012E EV/EBITDA of ~4x), but with repaired balance sheets and growth catalysts on the horizon."
Preferred Stocks – XTA for copper and RIO for iron ore, BHP remains a cornerstone of any portfolio
"Nomura has resumed coverage of BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RIO) with both stocks rated Buy (TPs GBP 25 & GBP 50, respectively). Xstrata (OTC: XSRAY) and Rio Tinto are preferred among the diversified miners. Xstrata offers leveraged exposure to copper and thermal coal, while Rio Tinto offers both quality and growth to iron ore. We regard BHP as remaining a core holding, offering high-quality assets, low cost operations, and growth to the wider resources sector."
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