Antofagasta

[Horsey]

Prelim results out this morning - market seems to like, up ~4% as I type.

https://www.investegate.co.uk/antofagas ... 00222273T/

Our financial results reflect the strong operating performance of the year. Despite lower realised copper prices EBITDA1 was in line with expectations at $2.2 billion with healthy operating cash flow of $1.9 billion.

The Board has recommended a final dividend of 37 cents per share which, combined with the interim dividend amounts to $432 million. This includes some $100 million of net proceeds from the sale of non-core assets during the year and reflects the Company's positive outlook and strong financial resources.

Final dividend of 37.0 cents per share declared, bringing the total dividend for the year to 43.8 cents per share, which amounts to $432 million equal to a 65% pay-out ratio plus some $100 million of net cash proceeds from the sale of non-core assets during the year. This is similar to last year's pay-out ratio of 67% and is in excess of the Company's minimum pay-out policy of 35% of underlying earnings per share.

To be paid on 24 May 2019 to shareholders on the share register at the close of business on 26 April 2019.

[monabri]

It sure is a dividend roller-coaster!

The current yield is just under 4% but it has been "on offer" at 5% at the end of 2018.

Moderator Message:
Monabri, where do you get your "just under 4%" from? At first glance, ANTO doesn't seem like a HYP share at all. -- MDW1954

[88V8]

It was an HYP pick, back in the day.
Do recall a thread titled The Road to Antofagasta, where it was extensively expounded, can't recall the author.
Yes, for a while used to churn out specials regular as clockwork, until it didn't.

I no longer hold.

V8

[daveh]

It sure is a dividend roller-coaster!

The current yield is just under 4% but it has been "on offer" at 5% at the end of 2018.

Moderator Message:
Monabri, where do you get your "just under 4%" from? At first glance, ANTO doesn't seem like a HYP share at all. -- MDW1954

With the full year dividend quoted in the first post of 43.8c converted to GB pounds at a rate of 1.3 and todays share price of 929p I get a dividend of ~3.6% which is just under 4%. I don't think it would be my miner of choice. I have BHP and S32 and am likely to be topping up the latter and I'd probably look at RIO before Antofagasta.

[monabri]

As 88V8 said, it was an HYP pick..."back in the day" (in accord with the Board guidance which says "Discussion of potential shares, and of shares which have been selected in the past, is acceptable on the HYP Practical Board.")

The "just under 4%" was in recognition that the effective yield is influenced by exchange rate movements & day-to-day movements so I quoted an approximate yield.

The main comment though concerned the dividend history.

[ReformedCharacter]

It was an HYP pick, back in the day.
Do recall a thread titled The Road to Antofagasta, where it was extensively expounded, can't recall the author.

V8

Yes I remember that, I think it may have started as one of Luniversal's posts. I hold.

RC

[Luniversal]

It was an HYP pick, back in the day.
Do recall a thread titled The Road to Antofagasta, where it was extensively expounded, can't recall the author.

V8

Yes I remember that, I think it may have started as one of Luniversal's posts. I hold.

RC

IIRC it was a post by the late esteemed Valuemargin called 'The Railway to' Somewhere or Other, referencing 'Fags''s origin as the Antofagasta, Chili (sic) & Bolivia Rly Co.

Not to my taste for a HYP, being a stickler for the five-year-rising-dividend-record stipulation. But in the past Fags may have brought off quinquennial runs within the usual wild cyclical ride for all miners' income (except BHP in the good old days). Valuemargin held that one should take such gyrations in one's stride, horses for courses: a view I am coming round to in these difficult days. Blue chips profess 'progressive' dividend policies more often than they unfailingly achieve them, but income reserve and safety margin mitigate most bumps.

Whether chilling out lets Fags through the door is another matter. I did include it in a dummy Footsie portfolio of Jun. 2011 called Growth and Yield (GRYP). The premise was that historic income growth rates, not starting yield, might have produced a better overall outcome than a conventional HYP.

In the version backtested from Nov. 2000 (HYP1's launch) Fags was the bumper bundle thanks to the copper boom in the mid-Noughties. It rose from a notional purchase price of 80p to 721p after 15 years. A £5,000 stake produced £24,750 in dividends (including hefty specials), as well as £913 from spinning off Quinenco. But famine had already replaced feast by the time I stopped updating GRYP 2000. I would not consider Fags suitable for a classic HYP, notwithstanding it may have recovered lately.

[MDW1954]

It was an HYP pick, back in the day.
Do recall a thread titled The Road to Antofagasta, where it was extensively expounded, can't recall the author.

V8

Yes I remember that, I think it may have started as one of Luniversal's posts. I hold.

RC

IIRC it was a post by the late esteemed Valuemargin called 'The Railway to' Somewhere or Other, referencing 'Fags''s origin as the Antofagasta, Chili (sic) & Bolivia Rly Co.

I wasn't aware that Valuemargin was the late Valuemargin. If so, I'm sorry to hear it. I was an avid collector of his posts. I don't have a PDF of that one, though, I think.

I've never really regarded Antofagasta as HYPable, its fortunes being too closely aligned to the price of one specific metal. One might as well buy a copper ETF.

MDW1954

[ReformedCharacter]

It was an HYP pick, back in the day.
Do recall a thread titled The Road to Antofagasta, where it was extensively expounded, can't recall the author.

V8

Yes I remember that, I think it may have started as one of Luniversal's posts. I hold.

RC

IIRC it was a post by the late esteemed Valuemargin called 'The Railway to' Somewhere or Other, referencing 'Fags''s origin as the Antofagasta, Chili (sic) & Bolivia Rly Co.

Not to my taste for a HYP, being a stickler for the five-year-rising-dividend-record stipulation. But in the past Fags may have brought off quinquennial runs within the usual wild cyclical ride for all miners' income (except BHP in the good old days). Valuemargin held that one should take such gyrations in one's stride, horses for courses: a view I am coming round to in these difficult days. Blue chips profess 'progressive' dividend policies more often than they unfailingly achieve them, but income reserve and safety margin mitigate most bumps.

Whether chilling out lets Fags through the door is another matter. I did include it in a dummy Footsie portfolio of Jun. 2011 called Growth and Yield (GRYP). The premise was that historic income growth rates, not starting yield, might have produced a better overall outcome than a conventional HYP.

In the version backtested from Nov. 2000 (HYP1's launch) Fags was the bumper bundle thanks to the copper boom in the mid-Noughties. It rose from a notional purchase price of 80p to 721p after 15 years. A £5,000 stake produced £24,750 in dividends (including hefty specials), as well as £913 from spinning off Quinenco. But famine had already replaced feast by the time I stopped updating GRYP 2000. I would not consider Fags suitable for a classic HYP, notwithstanding it may have recovered lately.

You're absolutely right:

Date: 11/06/2013
Author: valuemargin
Subject: The Railway to Antofagasta

This post is a regurgitation of part of a response to Degsy 67 on the 'Road to Rio' thread that, along with other efforts, appears to have been consumed by 'intergalactic space beasts' from some weird sounding planet.

The railway to Antofagasta has been delivering value to share owners on the London Stock Exchange since 1888, far more intensely since 1979 when the Luksic family took a controlling interest and licked the then regional Chilean conglomerate into shape. Today its mining division, overwhelmingly copper, but with some molybdenum by product, gold and silver accounts for 95% of turnover, with the railway to transport the minerals and a water utility making up much of the balance.

Since 1982, this play on the red metal with its long term framework agreements with the Chinese and 75% export sales to populous Asia overall, has delivered a stupendous 22% CAGR growth in ordinary dividends and additionally paid generous special dividends, typically greater than annual dividends, in the last 8 fiscal years. The annual dividend is set at a progressive but modest and sustainable level. For example the 2012 ordinary dividend equated to a yield of 1.5% at the current year low price of 884p. However, once the declared special dividend is added on for 2012, this elevated the yield to 7.25%. Inclusive of the special dividend, 70% of earnings were paid out in cash, a proportion that varies from year to year dependent on the operational and development needs of the business.

Now metal prices are under pressure following an unprecedented bull run between 2002 and 2011 and copper prices fell by nearly 10% during 2012 and softened by a further 5% during the first quarter of 2013. However, experts believe the supply of copper is tighter than other bulk metals and given its critical importance in the construction industry the long term portents are good considering global population is expected to rise from just over 7 billion currently to 9 billion by 2050, with the trend of urbanisation in Asia, Latin America and Africa likely to conform to the pattern of 19th century Europe.

Expect share price volatility and variability in total dividend, but this is a low cost producer, although costs have recently been rising, with a controlling interest in four major producing mines. Moreover, the Luksic family's 60% controlling stake with their focus on dividends is a great comfort shown recently when the CEO walked and was replaced after cost overruns on a development prospect. They are clearly on the case. The share count has been stable for years with no share issues or buybacks and the company's financial conservatism is demonstrated by its $2.6 billion cash pile. Refreshingly no stinking debt worries in a downturn here.

An unorthodox enhanced FTSE 100 yielder it maybe, with a greater market capitalisation than Marks & Spencer (MKS), but next to BHP Biliton (BLT) and Rio Tinto (RIO) this is the UK listed mining stock I would most entrust with hard earned risk capital with.

Valuemargin

RC

[Luniversal]

I only meant Valuemargin was 'late' re TMF, as we all are. Hope he may visit here one day - a great mentor to me.

[PinkDalek]

I only meant Valuemargin was 'late' re TMF, as we all are. Hope he may visit here one day - a great mentor to me.

If one and the same, see https://www.stockopedia.com/contributors/valuemargin/ (Registered: 29/11/16 Seen: 11 mins ago)

[MDW1954]

I only meant Valuemargin was 'late' re TMF, as we all are. Hope he may visit here one day - a great mentor to me.

If one and the same, see https://www.stockopedia.com/contributors/valuemargin/ (Registered: 29/11/16 Seen: 11 mins ago)

If I'm working the site correctly, he doesn't appear to be active...?

MDW1954

Moderator Message:
A poster has (rightly) pointed out that this discussion is off-topic, despite Valuemargin's original role in bringing ANTO to HYPers attention, back on TMF. So let's have no more discussion of Valuemargin, and just restrict ourselves to ANTO. My apologies to all. -- MDW1954