Absa cuts precious metals sector Absa cuts precious metals sector
Absa Capital downgraded the African precious metals industry to “negative” from “neutral,” and said sector profitability and returns will likely remain at historically low levels partly due to rising capital costs.
“In the context of weak gross demand growth and growth in recycling supply, we expect platinum metal markets to remain in surplus, limiting metal and equity price performance,” analyst Andrew Byrne wrote in a note to clients.
The market is currently underestimating the challenges that platinum group metals producers are facing, said Byrne, who expects average consensus earnings estimates will need to fall by 24 percent for fiscal 2012 and 31 percent for fiscal 2013.
