Jefferies stays at 'buy' on Anglo American despite headwinds from Chinese housing

"The overall message from Anglo is that the company is operating well and is on track to deliver its key growth projects on time," they said.

So despite recent headwinds from a collapse in iron ore and precious group metals' prices and a weaker economy in China, they expected the shares would recover through 2022.

They also stood by their 4,000.0p target price on the stock, implying 40% potential upside on a 12-month horizon.

According to Anglo's management, the economic environment in China was much like in 2015, with the housing market in decline as Beijing tried to rebalance the economy.

But now, as in 2015, more accomodative policies were likely to follow in order to avoid social unrest, although this time around Anglo belived that would take time.

Hence the company's forecasts for a rebound in metals' prices in the front half of 2022.

Worth noting in that regard, historically housing had been a good lead indicator for later-cycle commodities like base metals.

Regarding Cutifani's succession plans, he reportedly said that a "logical" time to retire would be after the Quellaveco greenfield copper project ramped up, likely in the second quarter of 2022.

Jefferies expected his replacement to take over in the front half of 2022 if he was an internal pick, or by the end of 2022 if he was an external one.

"Lack of clarity on succession is a modest overhang on these shares, in our view," they added.

"Anglo has a very strong balance sheet and is well positioned to weather the storm if markets weaken more than expected.

"If warranted, some spending on Woodsmith could be deferred, but the company has flexibility to manage cash flows and could even be opportunistically acquisitive if valuations materially decline (although the company believes copper assets won't be available at an implied copper price of less than $5/lb, even in a deeper downturn)."