Anglo American Plc posts a robust set of results
Anglo American Plc has upped its dividend offering in line with earnings growth. Traders will be looking for buy opportunities within the long-term uptrend.
Anglo American Plc
Anglo American Plc interim results have followed on from solid earnings reports from its subsidiaries Anglo American Platinum and Kumba Iron Ore earlier on in the week.
Some of the financial highlights from the results are as follows (figures are compared to previous year’s interim period):
Revenue increased by 8%
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 19%
Profit attributable to shareholders up 46%
Underlying earnings per share (EPS) increased by 28%
Interim dividend increased by 27%
Group atrributable Return on Capital Employed (ROCE) 22% from 19% previously
Investors have been pleased with the group’s improving operational efficiencies in the 2018 financial year (FY18) which are now being continued into FY19. Full year guidance for the group’s targeted cost and volume benefit is now $400 million. In recent years the company has done well to dramatically reduce its debt burden a former hindrance to investor sentiment. Anglos has a 40% payout ratio which see’s the dividend offering increase by 27% and a share buyback scheme planned to the amount of $1 billion.
Anglo American (UK): technical view
The share price of Anglo American Plc (Ticker:AAL) remains in a long term uptrend. In the short to medium term however, the price action shows a more rangebound environment. The short-term range is considered between the 2125 (support) and 2290 (resistance) levels. The initial reaction to the results has been positive and the share price now trades in the middle of the 2125–2290 range.
In line with the longer-term uptrend, traders might consider keeping a long bias to trades on Anglos. To invoke a long trade opportunity, we look to buy off support at 2125, or look for an upside breakout above the 2290 level (confirmed with a close above on a daily chart).
Should the share price of Anglos instead move to break the 2125 level, no action would be taken.
Anglo American (SA): technical view
The share price of Anglo American Plc (Ticker:AGL) remains in a long term uptrend. In the short to medium term however, the price action shows a rangebound environment. The short-term range is considered between the 36,970 (support) and 40,760 (resistance) levels. The initial reaction to the results has been positive and the share price now trading slightly above a confluence of trendline and horizontal support at 36,970.
In line with the longer-term uptrend, traders might consider keeping a long bias to trades on Anglos. To invoke a long trade opportunity, we look to buy off the confluence of support at 36,970 or look for an upside breakout above the 40,760 level (confirmed with a close above on a daily chart).
Should the share price of Anglos instead move to break the 36,970 level, no action would be taken.
In summary
Anglo American PLC has posted a robust set of interim results with improved margins and good earnings growth
The group is maintaining 40% pay-out ratio with a 27% increase in its interim dividend offering and a $1bn share buyback scheme
Anglos is continuing to achieve cost efficiencies, expected to amount to $400 million in FY19
Technical analysis shows the long-term trend for Anglos (UK and SA listings) to be up, although the price remains rangebound in the short term
Traders might look for long position on a bullish reversal off support or an upside break of resistance
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
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