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Tuesday, Anglo American (JO:AGLJ) Platinum Limited ( AMS (VIE:AMS2):SJ) (OTC: ANGPY) received an Outperform rating from RBC Capital Markets, with a price target set at ZAR710.00. The new coverage comes ahead of the company’s anticipated secondary listing in London this June, alongside a significant share distribution to existing shareholders. The company, currently valued at $10.4 billion, has demonstrated strong financial health according to InvestingPro analysis, with a notably robust balance sheet showing more cash than debt.
The mining company, which specializes in the production of platinum group metals, is poised for a secondary listing on the London Stock Exchange (LON:LSEG), in conjunction with its parent company Anglo American (AAL). As part of this strategic move, Anglo American Platinum plans to spin off 46.8% of its shares to its current shareholders while retaining a 19.9% stake. The company has maintained consistent dividend payments for eight consecutive years, with a current dividend yield of 2.03%. Discover more insights about ANGPY’s financial strength and growth potential with a InvestingPro subscription, which includes exclusive access to detailed Pro Research Reports.
RBC Capital Markets predicts a favorable outlook for Anglo American Platinum, citing the industry’s emergence from a cyclical low. The firm anticipates a tightening market with a fundamental deficit, further exacerbated by the end of destocking, which could lead to a rise in prices. The analysis suggests that nearly half of the platinum mines are operating at a loss, which may prompt peers to scale back production, contributing to a potential price squeeze. Despite industry challenges, InvestingPro data shows the company has maintained profitability with a healthy gross margin of 16.75% and strong cash flows sufficient to cover interest payments.
The firm’s analysts expect an 11% increase in basket price from the current spot price, which could result in a significant boost to the company’s operating free cash flow (FCF). This financial uplift is projected to more than triple the company’s operating FCF, signaling a strong financial position for Anglo American Platinum in the near future.
RBC Capital’s initiation at Outperform reflects confidence in Anglo American Platinum’s potential to capitalize on the current market dynamics and benefit shareholders in the process. With the upcoming secondary listing and share distribution, the company is positioned to attract additional investment and enhance its visibility in the global market.
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