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The Expert View: L&G, Associated British Foods, Redrow
by Chris Marshall on Sep 19, 2013 at 05:01
Liberum: BHP Billiton can cut costs, Anglo can’t
Profit-sapping cost inflation will hit Anglo American (AAL.L) hardest among Britain’s major listed mining companies, while BHP Billiton (BLT.L) can cut costs the most, analysts at Liberum have concluded.
Rising costs have eroded mining sector earnings by some 13% per year since 2006 and are set to be an important driver of share prices, say analysts Ben Davis and Richard Knights.
They have subsequently downgraded Anglo to a ‘sell rating’ as it ‘remains structurally disadvantaged to tackle costs’.
BHP conversely, is their top pick. ‘This view has been reinforced given the potential upgrades to consensus earnings on the back of future cost savings.
‘In an environment where investors still have concerns about the price impact of iron ore and copper supply additions in 2014, we believe BLT offers the best risk/reward profile of the majors.’
Shares in BHP closed down 0.5% to £18.91 on Wednesday.
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- Redrow PLC (RDW.L)
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- Associated British Foods PLC (ABF.L)