Taking Copper Chips Off the Table

Morgan Stanley turns cautious on European copper pure-plays, downgrading Antofagasta to Underweight due to record valuation premiums while maintaining an Overweight on KGHM as a deep value play.

Key Takeaways

• 1.Copper equity valuations have reached record highs, decoupling from replacement costs due to an intensifying M&A frenzy and buoyant metal prices.
• 2.Antofagasta (ANTO) is downgraded to Underweight as its valuation premium has reached historical highs, implying a copper price ~27% above spot LME.
• 3.KGHM is maintained as an Overweight preference due to its steep valuation discount (trading ~30% below LT average) despite recent management changes.

Table of Contents

• Key Charts
• Estimates & PT Changes
• Comps
• Risk Reward – Antofagasta (ANTO.L)
• Risk Reward – First Quantum Minerals Ltd (FM.TO)
• Risk Reward – Lundin Mining Corp. (LUN.TO)
• Risk Reward – Lundin Mining Corp. (LUMIN.ST)
• Risk Reward – KGHM Polska Miedz SA (KGH.WA)
• Risk Reward – Boliden (BOL.ST)
• Risk Reward – Aurubis AG (NAFG.DE)
• Disclosure Section

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