SFR has outperformed the copper price through 2023, benefiting from being the vehicle of choice for copper exposure since BHP’s takeover of OZ Minerals (OZL). While we don’t regard it as the same top quality as OZL, it is the best local pure copper play and will rise when the industrial metal regains its mojo, something we believe is inevitable through 2024/5 due to good old-fashioned supply and demand factors – We discussed these in our recent Resources into FY24 webinar.
In September, UBS downgraded SFR from buy to neutral on valuation terms as the stock challenged $7, a view we agreed with, having cut our position in April at $6.93. However, we have since re-established our position under $6, believing the stock is again offering good risk/reward after the washout of the weak funds, which switched from OZL after the takeover by BHP. In this case, UBS have followed our lead, having since upgraded SFR to a “Buy with a $7.60 target, a move that was supported by October’s strong Sept-quarter production numbers, which showed Botswana performing and becoming an increasingly important part of the SFR story moving forward.
- We like SFR for pure copper exposure on the ASX holding the stock in our Active Growth and Emerging Companies Portfolios.
MM is long and bullish SFR
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NB SFR are holding their AGM today, which may lead to some short-term volatility.
