Newspaper article The Journal (Newcastle, England)

Share Watch

Newspaper article The Journal (Newcastle, England)

Share Watch

Article excerpt

Byline: By Andrew Miller, Gerrard's Newcastle Office

Anglo American

Anglo American's interim results in August were ahead of market expectations, with solid margins and strong contributions from diamonds, industrial minerals and paper divisions.

Investor uncertainty over the South African Minerals Bill still exists, but significant progress has been made in the obligatory transfer of assets to black ownership.

Precious metal prices continue to strengthen, but this has been primarily due to speculative fund buying, rather than significantly improved industry fundamentals and the expectation of higher contract prices in 2004, rising Chinese demand and higher base metal prices should benefit Anglo American's peers more than the group itself.

The share price has performed well, but a noticeable change in the structure of the commodity cycle has switched the impetus away from Anglo American. We lower the recommendation to Underperform.

BP's third quarter net income, adjusted for unexpected provisions and restructuring charges, put the result close to the top of the market consensus range. This contrasts with Shell's disappointing results which still undershot the market consensus.

We still expect the company to resume buying back shares next year. Further, with capital expenditure likely to continue to soften, robust growth in exploration and production and reduced costs, returns should improve at a pace ahead of its peers.

We continue to expect BP to outperform its peers.

Our earnings forecasts have been lowered (from 19.3p per share this year and 20.3p next year) to accommodate lower residential energy usage as a result of warmer than average weather and lower upstream profits.

Nevertheless, over time, Centrica is expected to deliver further earnings growth from the development of its broad spread of domestic services in the UK and by exporting its UK energy supply expertise to the deregulating energy supply markets of North America. …

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