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Quilter Cheviot's Dhillon Still Long Anglo American

Liz Dhillon, an Equity Analyst at Quilter Cheviot, a UK-based wealth management firm, commented on Anglo American's Q3 production report today.

“Anglo American this morning reported a 6% rise in copper equivalent production for the third quarter with diamonds and metallurgical coal beating expectations, while thermal coal proved disappointing. The diversified mining group has undergone a significant portfolio restructuring following a suspension of the dividend in the second half of 2015; the restructuring and focus on costs has led to a significant improvement in productivity, lower costs, reduced capital expenditure and a substantial reduction in net debt which allowed the reinstatement of the dividend.

“We anticipate further portfolio restructuring and subsequent improved returns as the new chairman, Stuart Chambers, takes up his post next week. He has a strong M&A track record and some are looking for a separation of the South African bulk (coal and iron ore) businesses, although this is a highly political issue. We remain positive on the sector and Anglo American is still trading at a discount to its peers.”