Company announcements

 Kumba Iron Ore Ltd

Analysis of upcoming company announcements, using our market insight information and analysis tools.

For this edition, we cover the following stocks:

Barclays Africa Group Ltd

Woolworths Holdings Ltd

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Kumba Iron Ore Ltd

Full year earnings for year ending December 2013 expected 11 February 2014 

Kumba is a mining group of companies focused on the exploration, extraction, beneficiation, marketing, sale and shipping of iron ore.

 

Results expectation

Kumba Iron Ore Africa is expected to release full year results for 2013 on 11 February 2014.

Forward guidance released via the Stock Exchange News Service (SENS) highlights that for 2013 the company is expecting headline earnings per share to be around R46.60 vs R37.97 in 2012, which is a 22.7% year-on-year increase. Although production for the year at its Sishen mine was lower, a 19% depreciation of the rand favoured iron ore exports and is largely attributable to the years’ improved performance.

The company is expecting a mining license to be granted in the first half of 2014 which will expand the Sishen mining operation, relieving current technical constraints and allow for increased production.

The iron ore price is however expected by many to come under pressure in light of an increasing supply in the market as heavy weight producers, such as BHP Billiton, continue to increase production as well.

Exxaro (invested in Sishen) and Anglo American PLC (of which Kumba is a division) are likely to react to the earnings release as both companies derive a significant portion of their respective earnings from the iron ore investment of Kumba.

Source: IG Insight, as of 14:40 06/02/2014

Source: IG Insight, as of 14:41 06/02/2014

Technical View

The price of Kumba has formed an inverse head and shoulders formation marked on the chart with an H, L and R.

The pattern alludes to the recent downtrend reversing back up. The horizontal line at 44800 is regarded as the neckline and the dotted line measures the distance from the neckline to the “H” or head.

This same distance is projected from the neckline or breakout area to arrive at a proportionate target which is located at 52200.Should the price start trading below the right shoulder “R” at 41500, the pattern will be deemed to have failed.

Source: ProRealTime Charts, as of 06/02/2014

Fundamentals

Source: IG Insight, as of 14:50 06/02/2014

Source: IG Insight, as of 14:52 06/02/2014

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