Sociedad Minera Cerro Verde S.A.A.

EQUITY RESEARCH | Update
November 21th, 2012
Alberto Arispe
Edder Castro
Mining Industry
Head of Research
(511) 630 7500
[email protected]
Analyst
(511) 630 7529
[email protected]
Sociedad Minera Cerro
Verde S.A.A.
Cerro Verde
(LSE: CVERDEC1)
Equity's Fair Value (USD million)
Share's Fair Value (USD)
Previous Fair Value (Aug-11)
Recommendation
Market Capitalization (USD million)
Share's Market Value (USD)
Shares Outstanding (million)
Potential Upside
Range 52 weeks
YTD change
ADTV - L12M (USD 000)
Trading
12,951
37.00
45.90
Neutral
13,897
39.70
350.06
-6.8%
35 - 43
11.1%
661.9
LSE
Fair Value
USD 37.00
Neutral
Kallpa SAB updates Sociedad Minera Cerro Verde S.A.A.’s (Cerro
Verde) valuation recommending to maintain its shares within a
benchmark portfolio for the Peruvian market. Our USD 37.00 fair
value per CVERDEC1 share is 6.8% below its USD 39.70 market
price as of closing of November 20th 2012.
We value Cerro Verde using a Discounted Cash Flow to the Firm
methodology. For the valuation, we consider its single mining unit and
its expansion project, which is meant to increase the processing
capacity from 120,000 to 360,000 metric tons per day (TPD).
Investment thesis: Neutral
i. Exposure to copper
Cerro Verde is basically a copper producer. In 2011, 92% of its
sales corresponded to copper concentrates and copper cathodes.
In the same year, the company ranked second in the Peruvian
Ranking of Copper Producers with a 25% stake.
Source: Bloomberg, Kallpa SAB
ADTV: Average daily traded volume
L12M: Last Twelve Months
Financial Ratios
2011
2012e
2013e
P/E
P / BV
P / EBITDA
(CA - Inventory) / CL
EPS
ROE
ROA
12.89
5.19
8.46
5.03
3.08
50.4%
39.3%
16.35
4.25
10.34
6.93
2.43
28.6%
24.3%
12.84
3.36
8.24
9.57
3.09
29.2%
25.6%
During 2012, the red metal’s price suffered a fall due to lower
global demand. However, in accordance with estimations by
International Copper Study Group (ICSG), there will be a deficit of
400,000 MT in the global supply of refined copper that will not be
covered until 2014. Therefore, we expect copper price to remain
above USD/Lb 3.40 along 2012 – 2017.
ii. High profitability compared to its peers
Cerro Verde is one of most profitable mining in the world. Below is
a comparison of its financial margins:
Source: SMV, Kallpa SAB
Note: CA and CL are Current Assets and Current Liabilities, respectively.
Table N° 1: Financial margins' evolution
Chart N° 1: CVERDEC1 vs. Copper Spot
USD
CVERDEC1
USD/TM
Copper Spot
Operating Margin
Net Margin
EBITDA Margin
Cerro Verde
62%
43%
65%
60
11,000
Xstrata PLC
25%
17%
34%
10,000
Anglo American PLC
43%
20%
39%
50
9,000
Southern Copper Corp
55%
34%
57%
8,000
Antofagasta PLC
51%
20%
58%
40
7,000
6,000
30
Source: Bloomberg, Cerro Verde
5,000
Source: Bloomberg
Nov-12
Sep-12
Jul-12
May-12
Mar-12
Jan-12
Nov-11
Sep-11
Jul-11
May-11
Mar-11
4,000
Jan-11
20
Despite the fact that these margins have had a decreasing
tendency during the last 4 years, this hasn’t affected the
company’s competiveness. Cerro Verde’s ROE and ROA for the
last 12 months were 28.4% and 24.0%, respectively. With these
indicators, it exceeded the industry’s average ROE and ROA that
were 19.9% and 13.1%, respectively.
Mining industry | Sociedad Minera Cerro Verde S.A.A.
Chart N° 2: Cerro Verde's Cash Cost performance
iii. Increasing cash cost
Credit (silver y molybdenum)
Cash Cost*
USD/Lb
MM USD
Cash Cost without credit
1.40
250
1.25
200
1.10
150
0.95
100
0.80
0.65
50
0.50
0
2008
2009
2010
2011
(*) Cash Cost = (Operating costs - credits for other metals' sales) / Lbs - copper
production
Source: Cerro Verde, Kallpa SAB
The company’s cash cost has increased in the last 3 years. This
as a consequence of the reduction of produced copper pounds
from 695 million in 2008 to 647 million in 2011. However, this
happened in a scenario where silver and molybdenum sales
(credit to determine the operation’s cash cost) have been
increasing since 2009, mitigating the cash cost increase (See
Chart 2).
iv. Social risk
The company does not have a conflict record with communities in
Arequipa. This is due to a mutual development policy with the
communities of the zone. Up to date, the company has built for the
communities:
a)
Bamputañe Dam, concluded in December 2009.
b)
A water treatment plant in Alto Cayma, concluded in July
2012.
Chart N° 3: Copper companies - L12M ROE
40%
The company’s commitment in order to achieve the community’s
development reduces the probability of emerging social conflicts
that may affect current operations and/or the expansion project.
30%
20%
10%
Source: Bloomberg, Kallpa SAB
Teck
Anglo American
Xstrata
FreeportMcMoRan
Antofagasta
Cerro Verde
Southern
Copper
0%
However, it is important to remark that the company has been
penalized by Ministerio de Ambiente (Ministry of Environment),
through Organismo de Evaluacion y Fiscalizacion Ambiental –
OEFA (Organization for Environmental Evaluation and Inspection),
twice. The fines’ amount reached PEN 248,000 due to
carelessness in its productive process that contaminated the
ground and air of surrounding communities.
v. Support from Freeport – McMoran
Cerro Verde’s main shareholder is Freeport McMoran, which is the
world’s main molybdenum producer and one of the world’s main
copper producers. It also produces gold in a lower extent.
Chart N° 4: Cerro Verde's shareholders
Cyprus Climax Metals
Company
(Freeport - McMoRan's
subsidiary)
SMM Cerro Verde
Netherlands B.V.
(Sumitomo Metal Mining's
subsidiary)
53.6%
21.0%
Compañía de Minas
Buenaventura S.A.A.
19.6%
Minority Shareholders
5.8%
It has presence in South America, North America, Africa and
Indonesia, which demonstrates that it has achieved an important
geographically diversification that supports the continuity of its
operations.
As of closing of 2011, the company had calculated proved and
probable copper reserves equivalent to 136,700 million copper
pounds and 3,420 million molybdenum pounds. Of the total
reserves of Freeport, Cerro Verde represents 22% and 20% of
copper and molybdenum reserves, respectively.
Source: Cerro Verde
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Update
2
Mining industry | Sociedad Minera Cerro Verde S.A.A.
Company’s description
Sociedad Minera Cerro Verde S.A.A. is based in Peru and its shares list in the Lima Stock Exchange (LSE:
CVERDEC1) since November 2000.
Cerro Verde's mining unit is basically a copper and molybdenum open pit mine. The productive process starts with the
exploration & exploitation of its mining deposits, up to the flotation, leaching, concentration, smelting and refining of
the mineral for its subsequent sale. The company is one of the country’s main copper producers.
Picture N° 1: Cerro Verde open pit mine
Source: Cerro Verde
The shareholding is composed by the following: Freeport – McMoran Copper & Gold (53.6%), SMM Cerro Verde
Netherlands B.V. (Compañia Minera Sumitomo Metal’s subsidiary) with 21%, Compañia de Minas Buenaventura
S.A.A. (19.6%) and the remaining 5.8% is distributed among minority shareholders.
Given the size of the operations of its main shareholder, we consider that it is important to locate Cerro Verde within
Freeport – McMoran’s structure:
Chart N° 5: Cerro Verde within the structure of Freeport McMoRan Copper & Gold
Freeport McMoRan
Mining Units
North America
South America
Africa
Morenci
(85%) - Arizona
Cerro Verde
(53.56%) - Peru
Tenke (100%) Congo
Bagdad (100%) Arizona
El Albra
(51%) - Chile
Fungurume (100%) Congo
Safford (100%) Arizona
Candelaria
(80%) - Chile
Sierrita (100%) Arizona
Ojos del Salado
(80%) - Chile
Miami (100%) Arizona
Chino (100%) N. Mexico
Tyrone (100%) N. Mexico
Henderson (100%) Colorado
Source: Freeport McMoRan
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Update
3
Mining industry | Sociedad Minera Cerro Verde S.A.A.
Operating Unit
i)
Cerro Cero Mining Unit – 76.7% of the fair value
Chart N° 6: Cerro Verde's location in Peru
Zafranal
Cerro Verde
Tía María
San José
Minas de Cobre Chapi
Leyenda
Minas
Proyecto/Explor.
Source: Kallpa SAB
ii)
Cerro Verde's mine is located 30 km from the city of
Arequipa at 2,770 meters above sea level. Its proved and
probable reserves are 30,200 million copper pounds and
710 million molybdenum pounds, in accordance to
information as of 2011. In addition, given its current installed
capacity, it is estimated a 90 years life of mine (LOM).
Sociedad Minera Cerro Verde operates the mining units
Cerro Verde 1, 2 and 3. These three units constitute the
copper production unit, named Cerro Cero. Currently, it
processes 120,000 TPD and the copper annual production
reaches 600 million pounds.
Cerro Verde’s expansion project – 23.3% of the fair value
The expansion project aims to increase the annual production in 600 million copper pounds and 15 million
molybdenum pounds. With it, copper production will double in 2016. The investment related to this project totals
USD 4,400 million, an amount that had been reviewed twice due to higher infrastructure costs and wage
expenses. These resources will be used to build a concentrating plant and a leaching platform, additional to the
existing ones.
In December 2011, the company submitted the EIA (Environmental Impact Assessment) to the Peruvian
government for its review and approval. To date, the Peruvian government has not yet declared in regard of this
matter.
Favorable points to the company
a)
Construction of Bamputañe Dam
In accordance with the agreement that Cerro Verde signed with Empresa de Generacion Electrica de Arequipa
S.A. (EGASA), Cerro Verde built Bamputañe Dam in the district of Santa Lucia (Puno). In return, the company
will have power at a fixed tariff until 2015. From an economic point of view, this gives Cerro Verde cost stability
and decreases its sensitivity to inflation costs . In addition, it strengthens its relationships with the community
and decreases the probability of social conflicts.
b)
Drinking water and wastewater treatment plants
Cerro Verde signed an agreement with a committee formed by civilians and by Arequipa’s authorities so that the
company totally finances the construction of a drinking water treatment plant and the partially construction of a
wastewater treatment plant. The first of these commitments has been fulfilled. In this way, the company aims to
ensure water resources that are needed for its operations even after its expansion project’s development.
c)
Tax stability
Cerro Verde is neither subject to the special mining tax nor subject to royalty payments because the comapny
signed a stability contract (active until December 2013). However, the current government created a special
mining tax directed to the companies that hold a tax stability contract. Given this, it is subject to the payment of
this special tax which fluctuates between 4% and 13% of the period’s operating income.
d)
Sales stability
The company is committed to sell to Sumitomo Metal Mining Co. Ltd. 50% of its copper concentrate production
and 20% to Freeport McMoran Corp. Having assured 70% of its sales, the company focuses its efforts to
increase its production and to improve its operating efficiency.
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Update
4
Mining industry | Sociedad Minera Cerro Verde S.A.A.
Valuation
We value Cerro Verde using a Discounted Cash Flow to the Firm methodology @ 10.1%. Since we maintained the
company’s current equity structure (no debt), the cost of capital becomes the proper discount rate for the valuation. It
should be noted that the valuation’s analysis period covers 2012 to 2017 and that model incorporates results as of
closing of Q3 2012. From 2018, we assume a perpetual cash flow to the firm, without growth.
Cerro Verde, like every mining company, has a limited amount of reserves (90 years LOM at current production levels
and 30 years LOM post expansion project, considering proved & probable reserves). However, we assume a
perpetual flow since we believe that Cerro Verde will aim to expand its reserves inside and outside its current mining
unit.
The assumptions’ main changes regarding the previous update published in August 2011 are the following:
a)
b)
c)
d)
Decrease in copper prices.
Higher CAPEX for Cerro Verde’s expansion project.
The expansion project will operate at 100% in 2016.
Increase in cash cost and addition of a 2% annual inflation
-
The valuation’s main assumptions are the following:
i)
Production
Cerro Verde’s main target is copper production. It should be noted that the company produces silver and
molybdenun concentrates in a lower extent. Its production is basically divided into copper concentrates and
copper cathodes, which represented 92% of 2011’s sales. Our copper production estimations for 2012 – 2015
and after the expansion project reaches 100% of its production capacity, are the following:
Chart N° 7: Copper production's components
Table N° 2: Copper production's estimated composition after
……………………the expansion project.
Million
120% Lb
100%
80%
694
662
667
647
605
605
605
605
28%
31%
27%
26%
24%
24%
24%
24%
60%
40%
69%
73%
74%
74%
76%
76%
76%
76%
20%
(Million Lb.)
Copper concentrates
2009
2010
2011
Copper concentrades
Source: Cerro Verde, Kallpa SAB
2012e
2013e
2014e
Copper cathodes
2015e
2017e
2018e
460
460
460
145
145
145
Sub - Total
605
605
605
2016e
2017e
2018e
431
431
431
Processing plant's expansion - Cerro Verde
Copper concentrates
2008
2016e
Copper cathodes
(Million Lb.)
0%
ii)
Production in Cerro Verde operating mining unit
Copper cathodes
Sub - Total
TOTAL
169
169
169
600
1,205
600
1,205
600
1,205
Source: Cerro Verde, Kallpa SAB
Copper price
As it was previously mentioned, one of the main adjustments within our model is copper price’s performance. In
accordance with International Copper Study Group (ICSG), in 2012 the deficit for refined copper worldwide will
reach 426 thousand MT (2.1% of this year’s global demand). However, global production of refined copper is
expected to grow 6.0% in 2013 generating a 458 thousand TM surplus; in this way, pressures over copper price
are expected to decrease. In addition, the base metal price is currently responding to the uncertainty over the
debt crisis in Europe, to fears in USA in regard with the elimination of tax exemptions and the reduction of public
expenditure (Fiscal Cliff), and to China’s economic slowdown.
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Update
5
Mining industry | Sociedad Minera Cerro Verde S.A.A.
Given this, and in line with Bloomberg’s consensus, we expect copper price variation for 2013 to be zero or
negative. As long as new mining units and expansions in processing plants worldwide progressively cover the
supply’s deficit, copper price will decrease and this is reflected in our model.Below is our estimated price vector:
Table N° 3: Copper estimated price - USD/Lb.
2012
2013e
2014e
2015e
3.7
3.7
3.5
3.4
Price for copper concentrate
Source: Bloomberg, Kallpa SAB
On the other hand, copper future price’s performance is essential to calculate the company’s revenue. We
estimate that towards 2015, Cerro Verde’s copper revenue will represent approximately 93% of total sales. This
information is presented below:
Chart N° 9: Estimated annual variation in copper price*
Chart N° 8: Sales Breakdown by product
100%
6%
8%
7%
7%
7%
12%
10%
26%
75%
27%
22%
26%
26%
8%
6%
4%
50%
2%
68%
65%
71%
67%
67%
0%
-2%
25%
-4%
-6%
0%
-8%
2011
2012e
Copper concentrades
2013e
2014e
Copper cathodes
2015e
(*) Others correspond to silver and molybdenum concentrates which are produced in a lower
extent.
Source: Cerro Verde, Kallpa SAB
iii)
2012e
2013e
2014e
2015e
Others*
(*) We assume the same variation for copper concentrates and copper cathodes.
Source: Cerro Verde, Kallpa SAB
Operating costs
Cerro Verde is characterized for maintaining a stable cost structure. In the last 4 years, its operating costs as a
percentage of sales have been maintained between 30% and 33%, reflecting that the mining industry’s inflation
has been controlled by the company. However, as of closing of 9M 2012, the operating costs represented 36.5%
of total sales due to the increase in services rendered by third parties. In other words, inflation cost has affected
the company’s result for this year.
On the other hand, due to the decrease in produced copper pounds, Cerro Verde’s cash cost , after credit for
silver and molybdenum concentrate sales, has increased from USD/Lb 0.77 in 2010 to USD/Lb 0.95 in 2011. In
addition, due to the increase in operating costs during this year and to maintain the annual copper production in
approximately 600,000 pounds, we anticipate that the cash cost will fluctuate around USD/Lb 1.05 – 1.15. In
addition, we have considered a 2% inflation cost in the operating costs for the next years, since we expect that
this effect will continue in the future.
iv)
Operating expenses
Operating expenses have remained stable in regard with Cerro Verde’s sales, fluctuating between 3.3% and
3.4% of total sales. We have maintained the same performance for forecasted operating expenses along the
analysis period.
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Update
6
Mining industry | Sociedad Minera Cerro Verde S.A.A.
v)
CAPEX
We have considered two kinds of CAPEX in our valuation: a) Maintenance CAPEX and b) Expansion CAPEX.
a) Maintenance CAPEX.- Considering that the company grows in an organic way, we have considered in
our model a maintenance CAPEX equivalent to 16.2% of copper production over the base of historic
information of the last 3 years (the ratio is defined as CAPEX in USD million / million of produced copper
pounds). In this way, the annual maintenance CAPEX will reach USD 98 million during the analysis
period.
b) Expansion CAPEX.- We consider the expansion project’s implementation in Cerro Verde’s mining unit.
This project includes a USD 4,400 million total investment (our previous estimation considered a USD
3,600 million investment) up to 2015. In this way, the company aims to double its copper production
(approximately 1,200 million copper pounds per year) and to increase its molybdenum production towards
2016.
The total forecasted CAPEX totals USD 4,792 million towards 2015, as it is shown below:
Chart N° 10: CAPEX's composition
USD MM
Maintenance CAPEX
Expansion CAPEX
1,800
1,600
1,400
1,200
1,000
1,500
800
1,500
600
1,000
400
400
200
0
122
195
98
98
98
98
2010
2011
2012e
2013e
2014e
2015e
Source: Kallpa SAB
vi)
Expansion project’s financing
We believe that Cerro Verde will finance its processing plant’s expansion with available cash and with the cash
flows that will be generated along the analysis period. However, given that the company’s resources will be
redirected to finance the project, we expect a decrease in the dividend payout ratio. Although we have not
considered in our model that the company will finance its expansion project with debt, it is possible that this
happens in a non – significant way in order to maintain its equity’s structure in the long – term (no debt).
Chart N° 11: Dividend Payout Ratio
50%
45%
40%
30%
30%
20%
20%
20%
20%
2013e
2014e
2015e
10%
0%
2011
2012e
Source: Kallpa SAB
www.kallpasab.com
Update
7
Mining industry | Sociedad Minera Cerro Verde S.A.A.
vii)
Discount rate
Chart N° 12: Discount rate's calculation
COK
10.12%
Rf
3.30%
Beta
0.74
Risk premium
6.50%
Country risk
2.00%
Source: Kallpa SAB
www.kallpasab.com
Update
8
Mining industry | Sociedad Minera Cerro Verde S.A.A.
Scenario analysis
In the following analysis, we sensitize our fair value to changes in the assumptions, in accordance to the following
scenarios:
i)
Base scenario - FV: US$ 37.00
In the base scenario we consider the implementation of the expansion of Cerro Verde’s processing plant,
starting up operations at 100% in 2016, which will double copper production. The model considers that the
mining unit’s expansion will be financed with its own resources (cash and cash equivalents plus generated cash
flows). In addition, long – term copper price is USD/Lb 3.02. Therefore, we obtain a USD 37.00 fair value per
share.
ii)
Pessimistic scenario – FV: USD 23.50
Under this pessimist scenario, we assume a 20% fall in the copper price vector during 2013 – 2018, which
negatively affects long – term price. This happens under a weakening scenario in the American economy (non –
favorable decision in regard with the Fiscal Cliff), and in China (GDP decrease due to the European debt crisis),
which are the main consumers of the red metal. Therefore, our fair value per share decreases to USD 23.50.
iii)
Optimistic scenario – FV: USD 50.50
Under the optimist scenario we assume a 20% increase in the copper price vector during 2013 – 2018, which
affects positively the long – term price. This assumption emerges at a possible recovery in the global economy
and in the demand of the base metal. Therefore, we obtain a USD 50.50 fair value per share.
Chart N° 13: Scenario Analysis
60
+ 13.5
50
50.5
40
- 13.5
37.0
30
20
23.5
10
Pessimistic Scenario
Discount of 20% - Copper
Price
Base Scenario
Premium of 20% Copper Price
Optimistic Scenario
Source: Kallpa SAB
iv)
Scenario without the expansion project – FV: USD 28.37
On the other hand, it is important to calculate the fair value in the event that the expansion project is cancelled.
This is an unlikely scenario given the good relationships that Cerro Verde holds with the inhabitants and the
authorities in the department of Arequipa. However, in the mining industry, the social risk is always a fact to
consider. Therefore, our fair value without the expansion project is USD 28.37 per share.
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Update
9
Mining industry | Sociedad Minera Cerro Verde S.A.A.
Income Statement
INCOME STATEMENT (USD 000)
Sales
2008*
2009
2010
2011
2012e
2013e**
2014e**
1,835,911
1,757,510
2,368,988
2,520,050
2,168,037
2,524,609
2,369,332
Cost of sales
-685,090
-528,047
-645,959
-824,700
-806,748
-874,374
-1,034,907
Gross Income
1,150,821
1,229,463
1,723,029
1,695,350
1,361,289
1,650,236
1,334,425
Gross margin
62.7%
70.0%
72.7%
67.3%
62.8%
65.4%
56.3%
Operating expenses
-137,642
-108,999
-167,195
-136,070
-108,819
-133,402
-130,179
Sales expenses
-78,190
-67,877
-76,638
-83,612
-72,905
-83,444
-78,312
Other operating expenses
-59,452
-41,122
-90,557
-52,458
-35,914
-49,958
-51,867
1,013,179
1,120,464
1,555,834
1,559,280
1,252,470
1,516,834
1,204,247
Operating margin
55.2%
63.8%
65.7%
61.9%
57.8%
60.1%
50.8%
Net interest income
10,059
1,665
1,829
2,837
-2,418
2,294
3,251
Interest income
20,278
1,665
1,930
3,002
2,109
2,459
3,406
Operating Income
Interest expenses
-10,219
0
-101
-165
-4,527
-165
-155
Earnings before taxes
1,023,238
1,122,129
1,557,663
1,562,117
1,250,053
1,519,128
1,207,498
Taxes
-304,805
-413,601
-483,270
-483,718
-400,017
-509,143
-450,662
Net Income
718,433
708,528
1,074,393
1,078,399
850,036
1,009,985
756,836
39.1%
40.3%
45.4%
42.8%
39.2%
40.0%
31.9%
Net margin
Depreciation & Amortization
EBITDA
80,746
75,778
87,686
84,061
92,185
169,034
317,072
1,093,925
1,196,242
1,643,520
1,643,341
1,344,656
1,685,867
1,521,319
59.6%
68.1%
69.4%
65.2%
62.0%
66.8%
64.2%
EBITDA Margin
(*) The earnings distributed to employees has been included in the cost of sales in order to standardize the financial statement's presentation.
(**) In 2013 and 2014, USD 1,500 million will be invested per year for the expansion project, generating an increase in depreacition expenses.
Analysis of multiples
Company
Cerro Verde
Freeport-McMoRan
Xstrata PLC
Southern Copper Corp
Country
Market Cap.
(USD million)
P/E Trailing
12M
P/E 2012
EV/EBIDTA
Trailing 12M
EV/EBITDA
2012
P/BV
PERU
13,897
16.73
16.35
9.24
8.83
USA
36,321
12.11
11.88
5.96
5.78
Switzerland
29,625
9.61
12.75
5.17
ROE
ROA
4.21
28.8%
24.0%
2.12
18.1%
8.9%
6.20
1.03
10.7%
6.3%
USA
29,535
13.81
13.72
7.92
8.05
4.49
36.3%
20.6%
Anglo American PLC
UK
23,561
9.69
12.29
5.21
4.36
0.93
8.7%
4.7%
Teck Resources Ltd
Canada
18,851
9.95
13.42
5.15
5.59
1.05
7.4%
3.8%
UK
12,363
16.59
14.70
5.04
5.88
3.04
19.4%
10.2%
First Quantum Minerals
Canada
10,393
11.70
20.32
10.07
10.34
2.03
38.0%
28.0%
Inmet Mining Corp
Canada
3,718
10.63
10.11
4.89
5.66
1.02
10.1%
7.3%
19,807
12.31
13.95
6.52
6.74
2.21
19.7%
12.6%
Antofagasta PLC
Average
Source: Bloomberg
EV: Market capitalization + preferred equity + total debt - cash and cash equivalents
Chart N° 14: EV/EBITDA vs P/E - Peer Companies
Chart N° 15: ROE vs ROA - Peer Companies
EV/EBITDA
10
Mkt. Cap.
Mkt. Cap.
P/BV
50%
Southern Copper
Cerro Verde
8
Freeport
McMoRan
Southern Copper
40%
Xstrata
Cerro Verde
Freeport
McMoRan
30%
6
Teck
4
20%
Anglo American
Xstrata
10%
2
Anglo American
Teck
0%
11
12
13
14
15
P/E
www.kallpasab.com
16
17
18
0%
5%
10%
15%
20%
25%
30%
P/E
Update
10
Mining industry | Sociedad Minera Cerro Verde S.A.A.
Appendix – Disclaimer
Analyst certification
The analyst that prepared this report hereby certifies that: i) the opinions and views expressed in this valuation report, in regard with
the issuer and with the company’s overview, reflected his/her personal opinion and ii) No part of his/her salary compensation was, is
or will be related directly or indirectly to the recommendations expressed in this report.
The economic compensation of the analyst that prepared this report is based in several factors, including but not limited to Kallpa
Securities SAB’s profitability and the profits generated by its different areas, including investment banking. In addition, the analyst
does not receive any kind of economic compensation from the companies he/she covers.
This valuation report was prepared by Kallpa Securities SAB’s employees that maintain the position of Analyst. Persons involved in
the elaboration of this report are authorized to maintain shares.
Share prices in this report are based on market prices as of closing of the day prior to the publication of this report, unless it is strictly
stated.
General statement
This document is for informative purposes only. Under no circumstances it should be used / be considered as an offer of sale or an
application of purchase of shares or any other securities mentioned in this document. The information herein has been obtained from
sources which are believed to be reliable, but Kallpa Securities SAB does not guarantee the trustfulness or accuracy of the content
of this report, or the future market values of shares or other securities mentioned in this document. The views and opinions
expressed in this document constitute our opinion at the time of this report and are subject to change without any notice. Kallpa
Securities SAB does not guarantee analysis updates before any change in the circumstances of the market. The products referred in
this document may not be available for purchase in some countries.
Kallpa Securities SAB has reasonably designed policies to prevent or to control the exchange of non-public information used by
areas such Research and Investment, Capital Markets, among others.
Definition of qualification ranges
Kallpa Securities SAB has 5 qualification ranges: Overweight +, Overweight, Neutral, Underweight and Underweight - . The analyst
will assign the coverage one of these ranges.
UnderweightUnderweight
Neutral
< - 30%
-15% to -30%
-15% to 0%
> + 30%
+15% to +30%
+15% to 0%
Overweight+
Overweight
Neutral
The range assigned to each company covered by the analyst in these reports is based on the analysis/monitoring Kallpa Securities
SAB has been developing for the company. In some cases, the analyst can express his/her short-term points of view to traders,
vendors and some Kallpa Securities SAB’s clients but this point of view may differ in time by market volatility and other factors.
The fair value calculated by Kallpa SAB is based in one or more valuation methodologies commonly used by financial analysts,
including but not limited to discounted cash flows, In Situ valuations or any other applicable methodology. It should be noted that the
publication of a fair value does not imply any guarantee that the value will be achieved.
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Update
11
Mining industry | Sociedad Minera Cerro Verde S.A.A.
KALLPA SECURITIES SOCIEDAD AGENTE DE BOLSA
MANAGEMENT
Alberto Arispe
CEO
(511) 630 7500
[email protected]
TRADING
Enrique Hernández
Manager
(51 1) 630 7515
[email protected]
Eduardo Fernandini
Head Trader
(51 1) 630 7516
[email protected]
Javier Frisancho
Trader
(51 1) 630 7517
[email protected]
Jorge Rodríguez
Trader
(51 1) 630 7518
[email protected]
Edder Castro
Analyst
(51 1) 630 7529
[email protected]
Humberto León
Analyst
(51 1) 630 7527
[email protected]
Fátima Ramírez
Assistant
(51 1) 630 7500
[email protected]
Alan Noa
Analyst - Securities
(51 1) 630 7523
[email protected]
Mariano Bazán
Analyst - Treasury
(51 1) 630 7522
[email protected]
Armando Trujillo
IT
(51 1) 630 7500
[email protected]
Daniel Berger
Representative
(51 1) 652 6453
[email protected]
Victor Hugo Rossel
Representative
(51 1) 652 6400
[email protected]
Gerardo del Águila
Representative
(51 1) 626 8700
[email protected]
Jonathan del Águila
Representative
(51 1) 626 8700
[email protected]
CORPORATE FINANCE
Ricardo Carrión
Manager
(51 1) 630 7500
[email protected]
EQUITY RESEARCH
Marco Contreras
Analyst
(51 1) 630 7528
[email protected]
OPERATIONS
Elizabeth Cueva
Manager
(51 1) 630 7521
[email protected]
MIRAFLORES OFFICE
Jose Antonio Avendaño
Representative
(51 1) 652 6452
[email protected]
CHACARILLA OFFICE
Hernando Pastor
Representative
(51 1) 626 8700
[email protected]
EL POLO OFFICE
Ana María Castro
Representative
(51 1) 630 7532
[email protected]
Gissella Gárate
Investment Advisor
(51 1) 630 7533
[email protected]
AREQUIPA OFFICE
Jesús Molina
Representative
(51 54) 272 937
[email protected]
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Update
12