Berenberg keeps 'sell' rating on Anglo after steelmaking coal exit

(Sharecast News) - Anglo American's first step of its simplification plan was welcomed by investors this week with shares rising after the sale of its metallurgical coal business; but Berenberg wasn't convinced, with the broker raising concerns about its restructuring strategy. Berenberg reiterated a 'sell' rating on the stock and maintained a 2,100p target price, indicating 11.5% downside from Tuesday's closing price of 2,372.5p.

Anglo said on Monday that it has been able to offload its entire steelmaking coal division for total of $4.9bn after the sale of its remaining portfolio to Peabody Energy for $3.8bn. This follows the sale of its interest in Australian metallurgical coal mine Jellinbah for $1.1bn earlier this month.

Berenberg reckons the next step of Anglo's plan will be to sell its Brazilian nickel assets, but said "getting a good price will be difficult".

"After this, Anglo will seek to demerge Anglo American Platinum - we believe the decision to divest is not the right one at this point of the cycle," the broker said.

Looking ahead, Berenberg said: "We question how Anglo can create shareholder value through the divestment of De Beers, given a bottom-of-the-cycle diamond price and broadly unattractive prospects for diamond prices into the medium term. We see downside sentiment risk on at least the nickel and De Beers divestments."

The stock was up 2.2% at 2,425.5p by 1157 GMT, having gained 9% over the past two weeks.