Antofagasta climbs on water business sale

Antofagasta climbed on Thursday after the copper miner sold its legacy water business for about twice the estimated value. But investors expecting a cash return may be disappointed, its joint house broker cautioned.

The group agreed to sell its domestic water business in Chile, which it had bought in 2003 for about $160m, to Colombian utility EPM for $965m before tax. The price was equivalent to nearly 13 times earnings, against Antofagasta's own multiple of about 8 times earnings, suggesting a release of hidden value equivalent to 25p per share according to analysts.

Antofagasta closed up 4.7 per cent to 784.5p. However, the cash boost is more likely to fund expansion and M&A than special dividends, JPMorgan Cazenove said.

"While this deal implies the balance sheet moving to $500m-$900m net cash, we do not believe management is minded to make a further special cash return to shareholders this year," the broker said. "The outlook for copper in 2015 remains uncertain, while the company also has a portfolio of development options for which we believe they are keen to retain maximum financial flexibility."

The disposal also raised speculation Antofagasta might sell its rail division, which has been valued at up to $1bn. Management may be more emotionally attached to the railway, however, the company having listed in London as the Antofagasta & Bolivia Railway Company in 1888.

Miners underpinned the wider market, lifting the FTSE 0.4 per cent or 25.43 points to 7,053.67. Vale's move to curtail iron ore production helped lift peers such as Rio Tinto, up 3.3 per cent to £29.58, and BHP Billiton, 3.3 per cent higher at £15.32.

Anglo American rallied 4.7 per cent to £10.62 after its first-quarter production report caused no surprises.

William Hill lost 4.6 per cent to 361.2p on weaker than expected quarterly earnings, which it blamed largely on one week of unfavourable football results. Of greater concern for analysts were rising marketing costs in Australia, where the group had been retiring the Sportingbet brand.

Al Noor Hospitals was down 2.5 per cent to 870p after two directors of its founding shareholder, Ithmar Capital, resigned from the board. Al Noor has dropped 9 per cent since Ithmar last week tried to sell its 20 per cent stake, which left broker Deutche Bank holding nearly half the placing.

A profit warning from Matomy Media, an online affiliate marketing specialist floated in July at 227p a share, sent its shares sliding 17.4 per cent to 142p. The company blamed a squeeze on advertising space as media trading platforms put in place stricter controls, as the industry tried to tackle fraudulent and low-quality traffic.

GW Pharmaceuticals gained 2.2 per cent to 639.5p after detailing results of a trial of its Epidiolex cannabis oil for treating epilepsy seizures.

Chinese clothing maker Camkids fell 36.6 per cent to 22.8p after warning that distributors had cancelled and postponed orders, meaning earnings would miss expectations.

Trap Oil dropped 57 per cent to 0.3p after the North Sea licence holder booked a £44m annual loss and said it was "highly likely" to become insolvent.

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