Are the top four gold miners in South Africa still a buy?
The following looks at recent earnings outcomes from South Africa’s top four gold miners as well as their current institutional broker ratings and short-term retail sentiment.
The four largest gold miners on the JSE:
Are ANG, GFI, HAR, and SSW shares still a buy?
Broker ratings and IG client sentiment
| Thomson Reuters (institutional) | IG Client Sentiment (retail trader) | |||||||
| Strong Buy | Buy | Hold | Sell | Strong Sell | Average rating | Long | Short | |
| AngloGold Ashanti | 2 | 2 | 1 | 1 | 2 | Hold | 90% | 10% |
| Gold Fields Ltd | 3 | 3 | 2 | 1 | 0 | Buy | 83% | 17% |
| Harmony Gold | 2 | 0 | 3 | 1 | 0 | Buy | 83% | 17% |
| Sibanye Stillwater | 3 | 1 | 1 | 0 | 0 | Buy | 82% | 18% |
The table highlights how major South African gold miners (AngloGold Ashanti, Gold Fields, Harmony Gold and Sibanye Stillwater) are currently viewed on both analyst ratings (as polled by Thomson Reuters), as well as IG client sentiment at the time of writing.
The Thomson Reuters analyst ratings and IG Client sentiment are features available on IG’s trading platform . The ratings and sentiment indicators are snapshots of these views on the respective shares as of the 5th of September 2020.
ANG, GFI, HAR and SSW share price outlook positive for IG Clients and Institutional Investors
Major gold miners Gold Fields, Harmony and Sibanye Stillwater all carry average long-term analyst ratings of ‘Buy’ amongst institutional analysts, while AngloGold Ashanti has an average rating of ‘hold’ and is the only one of the four companies cover here to have two ‘strong sell’ recommendations.
In terms of IG client sentiment data, AngloGold carries the most ‘long’ open interest and the least short open interest (as of the 5th of September 2020).
“Long” means that traders with open positions on the company expect the price to rise in the near term, while ‘short’ means that traders with open positions on the company expect the price to fall in the near term.
ANG, GFI, HAR and SSW trading view
Locally listed gold mining counters ANG, GFI, HAR and SSW have seen their respective share prices amongst the best performing in 2020, benefitting from improved operational efficiencies and significant gains in the rand basket price of the underlying commodity.
AngloGold Ashanti (ANG)
AngloGold Ashanti Ltd (ASX) is South Africa’s largest gold miner (representing 3.57% of the Index) in terms of market capitalization. However after selling its South African assets to Harmony Gold, Harmony becomes the country’s largest gold producer.
South Africa's mines ministry has recently approved the asset sale on condition that it does not delist from the Johannesburg Stock Exchange (JSE). AngloGold is exiting its local operations to focus on what it deems its less cost intensive operations in Ghana, Australia and America (North and South).
As has been the recent industry trend, interim earnings for the gold miner have benefitted from a sharp increase in gold prices, positive currency translations and cost cutting initiatives. Headline earnings per share for the six months ended June 30 gained by 234% from the prior year’s comparative period.
| Thomson Reuters (institutional) | IG Client Sentiment (retail trader) | |||||||
| Strong Buy | Buy | Hold | Sell | Strong Sell | Average rating | Long | Short | |
| AngloGold Ashanti | 2 | 2 | 1 | 1 | 2 | Hold | 90% | 10% |
Gold Fields (GFI)
Interim results released in August this year showed a massive 300% increase in Gold Fields Ltd - ADR group headline earnings per share from the prior year’s comparative period. Investors have been rewarded with a three-fold increase in the company’s interim dividend offering (in $ terms).
| Thomson Reuters (institutional) | IG Client Sentiment (retail trader) | |||||||
| Strong Buy | Buy | Hold | Sell | Strong Sell | Average rating | Long | Short | |
| Gold Fields Ltd | 3 | 3 | 2 | 1 | 0 | Buy | 83% | 17% |
Harmony Gold (HAR)
Harmony Gold Mining Co Ltd is expected to release full year results in mid-September after having delayed the release thereof due to ‘difficulties in completing audits and divisional reporting’ as a result of Covid-19 disruptions. However recent guidance from the company has suggested a 15% drop in gold production for the period due to lockdown restrictions.
The restrictions have also increased the groups ‘All-in Sustaining Costs For All Operations’ by between 17% and 19%. A softer ZAR and higher gold price over the period would have boosted the average received price for the commodity by 25%, equating to strong operational cash flow for the business.
| Thomson Reuters (institutional) | IG Client Sentiment (retail trader) | |||||||
| Strong Buy | Buy | Hold | Sell | Strong Sell | Average rating | Long | Short | |
| Harmony Gold | 2 | 0 | 3 | 1 | 0 | Buy | 83% | 17% |
Sibanye Stillwater (SSW)
While Sibanye Stillwater Ltd has seen a strong diversification into platinum group metals the company is still a major producer of gold in South Africa. Recent results have shown a return to profitability in the interim period from a loss in the prior year’s comparative period, benefiting from buoyant precious metal prices and a softer ZAR. The return to profitability see’s Sibanye rewarding shareholders by reinstating its dividend offering.
| Thomson Reuters (institutional) | IG Client Sentiment (retail trader) | |||||||
| Strong Buy | Buy | Hold | Sell | Strong Sell | Average rating | Long | Short | |
| Sibanye Stillwater | 3 | 1 | 1 | 0 | 0 | Buy | 82% | 18% |
How to trade top 4 gold miners in South Africa
If you want to trade any of the top 4 gold stocks discussed, you can utilise IG’s CFD trading platform to speculate on the share price movements of the underlying asset – to buy (long) or sell (short) following these simple steps:
- Create an IG Trading Account or log in to your existing account
- Enter the company name or ticker in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
In summary
- Gold counters continue to benefit from gains in the rand price of the commodity
- Sibanye Stillwater has reinstated its dividend offering to investors
- Harmony gold, after acquiring AngloGold South African assets will be the largest producer of gold in the country
- AngloGold is exiting its local operations to focus on what it deems its less cost intensive operations
- Harmony, Gold Fields and Sibanye all carry long term average analyst ratings of buy
- AngloGold Ashanti has an average long-term analyst rating of hold
- All four gold miners covered see IG clients with a net long open interest
- AngloGold has the highest percentage of long open interest by IG clients
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research 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 and quarterly summary.
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