Absa Sells Implats Stake as Platinum Prices Fall, Costs Rise

Absa Group Ltd. (ASA)’s money management unit sold all its shares in Impala Platinum Holdings Ltd. (IMP) after the price of the precious metal fell more than a fifth in 2011 and as prospects for South African platinum miners deteriorated.

“The platinum price just isn’t high enough to sustain cost growth,” Chris Gilmour, an analyst at Absa Investments, said in a presentation to the media in Johannesburg today. “Platinum stocks are looking pricey.”

Absa Investments, which manages private client portfolios as part of the 110 billion rand ($14 billion) under management at Absa Asset Management Ltd., also sold stock in Naspers Ltd., Africa’s biggest media group, and invested in computer services company Datatec Ltd. (DTC)

The FTSE/JSE Africa Platinum Mining Index (JPLAT) fell 28 percent in 2011, the worst performer on the Johannesburg bourse, as the spot price of platinum declined 21 percent. Production at Anglo American Platinum Ltd., the world’s biggest miner of the metal, dropped 9 percent last year as South Africa ordered more safety stoppages, the company said on Jan. 26. Headline earnings per share at Royal Bafokeng Platinum Ltd. fell as much as 20 percent in the year through December from a year earlier, the company said on Jan. 31.

Datatec’s price-earnings valuation is likely to fall “significantly” once it reports earnings for the year through February, making it attractive, Gilmour said.

Earnings per share rose 84 percent to 42 U.S. cents, Datatec said in a regulatory filing on Jan. 18. It plans to pay a total capital distribution of 16 cents for the year, up from 13 cents previously. Shares in the company climbed 21 percent over the past 12 months, valuing it at 16 times reported earnings.

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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