Global mining heavyweight Glencore Plc (ASX: GLC) has joined the ASX, with broker Canaccord Genuity weighing in on what the company's shares are worth.
The shares slipped shortly after beginning trade on the ASX, falling from $11.27 to $11.19, and well shy of CG's price target for the company, which I'll get to shortly.
First, let's have a look at the company itself.
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Major diversified miner with a difference
Glencore is quite different from Australia's two major miners, BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO), in that it still has a large exposure to coal, and also has a commodity trading arm, which, according to CG, "has no direct equivalent among the ASX mining majors''.
It also has negligible iron ore exposure while it does have a focus on copper.
Given the size of the company, CG said it was likely to be included in the S&P/ASX 200 Index (ASX: XJO) in March next year, and could also be included in the S&P/ASX 100 Index (ASX: XTO) at that time, although that inclusion was more likely to come later in the year.
CG said the listing on the ASX made strategic sense for Glencore, as it would make future acquisitions easier, broaden the company's shareholder base, and "improve investor access in a market with deeper resources-sector expertise and greater appetite for mining sector exposure than the London Stock Exchange''.
CG added:
Overall, Glencore's addition to the ASX will give investors greater choice within the resources sector, adding a global top-10 miner by market capitalisation with highly sought-after copper exposure and a distinctive earnings profile. Glencore combines a diversified global mining portfolio, spanning future-facing metals such as copper and zinc, as well as metallurgical and thermal coal, with one of the world's largest commodity marketing businesses. Its Marketing arm trades physical commodities produced by both its own mines and third-party producers. That combination sets Glencore apart from the incumbent ASX major diversified miners, which lack comparable large-scale commodity trading businesses, have largely exited coal and remain materially exposed to iron ore.
CG said copper was "comfortably" Glencore's largest earnings contributor, accounting for 46% of its industrial earnings, excluding the marketing segment.
CG added:
Healthy production growth from the company's base portfolio is forecast to lift copper's share of group EBITDA to 54% by FY30. By then, Glencore expects to have established itself as a top-five global producer, with a projected first-quartile total cash cost position.
CG said if Glencore executes well on its copper expansion plans, there was scope for material broker upgrades.
CG itself has a price target of $12.90 on Glencore shares.
