HCM have Upgraded Xstrata PLC, LON:XTA based the improved on Copper Outlook of the group. Shayne Heffernan has set a price target of 1,800 for 2012.

Last year, the copper business made a $US3.82 billion operating profit representing 50 per cent of the mining giant's total operating profit.

Charlie Sartain can take much of the credit for Xstrata's Copper success Shayne Heffernan said.

Sartain has headed what is now Xstrata's most profitable business unit since just after the MIM takeover, when Xstrata chief executive Mick Davis promoted him from head of MIM's Latin American business.

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When Xstrata bought MIM, Australia made up about half its copper production. It now makes up about 20 per cent of Xstrata's 1 million tonnes of annual copper production, but this is expected to drop to between 10 and 15 per cent as the mining giant ramps up production to 1.5 million tonnes a year from 2014 and, after that, potentially beyond 2 million tonnes.

The decline in proportion is not because of any uncertainty in Australia. It is just that the bigger projects are in countries such as Chile, Argentina, The Philippines and Papua New Guinea.

Sartain originally worked with MIM Holdings for more than 20 years, initially in a number of mining engineering and management roles at Mount Isa Mines, then as General Manager of the Ravenswood Gold operations and General Manager of the Ernest Henry Mine, all in Queensland, Australia. In mid-2000 he was appointed General Manager of Minera Alumbrera in Argentina, and then Executive General Manager - Latin America in mid-2002. In July 2003 Mr Sartain was appointed Chief Executive Copper Americas for Xstrata, before being appointed into his current role in January 2004.

External appointments: Mr Sartain is a Director and current Chairman of the International Copper Association, the leading organisation for promoting the use of copper worldwide, a Director of the Council on Australian Latin America Relations, a Director of the Sustainable Minerals Institute at the University of Queensland, and a Director of Wesley Research Institute.

Xstrata plc is a diversified mining company. The Company's business is organized into five global commodity businesses. Xstrata Alloys is the producer of ferrochrome, vanadium and has a platinum group metals business.

Xstrata Alloys also owns carbon operations, which supply raw materials to its ferrochrome smelters. Xstrata Copper is the copper producer, with mining and processing facilities and projects located in Australia, Chile, Peru, Argentina and Canada.

It also manages a recycling business (Xstrata Recycling). Xstrata Copper's portfolio of projects includes Las Bambas, Tampakan, El Pachon and Frieda River. Xstrata Coal is the exporter of thermal coal and a producer of hard coking coal and semi-soft coal.

Xstrata Nickel is a nickel and cobalt producer. Xstrata Zinc is the miner and producer of zinc. Xstrata Technology Services provides technologies and specialist services in the areas of mining, mineral processing and metals extraction to mining companies.

Institutional Holders

% Shares Owned:78.86%
# of Holders:870
Total Shares Held:2,337,954,086
3 Mo. Net Change:235,099,504
# New Positions:45
# Closed Positions:31
# Increased Positions:278
# Reduced Positions:231
# Net Buyers:47

Valuation Ratios

CompanyIndustrySectorS&P 500
P/E Ratio (TTM)8.7914.4517.9615.16
P/E High - Last 5 Yrs.72.4357.66149.09102.54
P/E Low - Last 5 Yrs.2.5415.1228.4512.78
Beta1.850.991.271.20
Price to Sales (TTM)1.393.782.072.09
Price to Book (MRQ)1.070.541.672.98
Price to Tangible Book (MRQ)1.330.621.834.69
Price to Cash Flow (TTM)5.4111.9915.3810.00
Price to Free Cash Flow (TTM)135.363.2248.5438.40
% Owned Institutions----

Dividends

CompanyIndustrySectorS&P 500
Dividend Yield1.341.171.422.26
Dividend Yield - 5 Year Avg.0.830.861.482.37
Dividend 5 Year Growth Rate14.5716.6615.45-1.41
Payout Ratio(TTM)18.1931.9316.9332.52

Growth Rates

CompanyIndustrySectorS&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago23.2932.7916.4912.90
Sales (TTM) vs TTM 1 Yr. Ago25.6319.2818.4410.74
Sales - 5 Yr. Growth Rate30.5314.9913.607.90
EPS (MRQ) vs Qtr. 1 Yr. Ago26.3851.2618.6411.67
EPS (TTM) vs TTM 1 Yr. Ago133.60---
EPS - 5 Yr. Growth Rate4.6613.0022.696.83
Capital Spending - 5 Yr. Growth Rate46.4018.6618.404.03

Financial Strength

CompanyIndustrySectorS&P 500
Quick Ratio (MRQ)0.730.380.730.76
Current Ratio (MRQ)1.390.581.121.12
LT Debt to Equity (MRQ)17.2812.0511.31110.67
Total Debt to Equity (MRQ)22.5219.5729.59148.82
Interest Coverage (TTM)--0.070.1323.29

Profitability Ratios

CompanyIndustrySectorS&P 500
Gross Margin (TTM)-36.1527.4835.19
Gross Margin - 5 Yr. Avg.35.4847.1326.2533.84
EBITD Margin (TTM)33.23---
EBITD - 5 Yr. Avg30.2934.1819.6021.01
Operating Margin (TTM)24.2525.7014.99-
Operating Margin - 5 Yr. Avg.21.7726.9814.3515.78
Pre-Tax Margin (TTM)22.2625.8015.2615.65
Pre-Tax Margin - 5 Yr. Avg.19.5627.9914.1915.31
Net Profit Margin (TTM)16.6019.4911.2411.81
Net Profit Margin - 5 Yr. Avg.13.6720.3010.2911.38
Effective Tax Rate (TTM)25.4219.1523.4622.32
Effecitve Tax Rate - 5 Yr. Avg.30.1128.0027.9224.99

Efficiency

CompanyIndustrySectorS&P 500
Revenue/Employee (TTM)549,81516,866,0141,158,403,339777,459
Net Income/Employee (TTM)91,2712,640,365125,796,440105,141
Receivable Turnover (TTM)9.862.455.249.57
Inventory Turnover (TTM)-0.914.778.44
Asset Turnover (TTM)0.510.220.990.63

Management Effectiveness

CompanyIndustrySectorS&P 500
Return on Assets (TTM)8.393.5610.147.30
Return on Assets - 5 Yr. Avg.6.6413.0911.066.45
Return on Investment (TTM)9.744.4615.809.54
Return on Investment - 5 Yr. Avg.7.6815.8316.308.54
Return on Equity (TTM)13.796.0915.6424.97
Return on Equity - 5 Yr. Avg.12.9817.8119.9321.04

 

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services. www.livetradingnews.com