BCP downgrades Minsur to "hold"

Peru's Banco de Credito (BCP) has modified its recommendation for shares in local tin miner Minsur from "buy" to "hold." The bank's capital markets division based its advice on a 23% rally in Minsur's shares so far this year, within the context of lagging industrial production and the slow recovery of the world economy. The bank said that Minsur shares had an upside potential of less than 5% and set a target price of 4.30 Peruvian soles a piece. Minsur shares were trading at 4.20 soles on Monday. The bank's analysts said the main reason for the positive performance of Minsur this year was its attractive dividend yields of about 3.5%. Minsur reported net profits of US$17.4mn in first quarter 2003, compared to US$12.9mn in the first three months of last year due to a 4.1% increase in the volume of tin sold, an 18.9% rise in international tin prices - which currently stand at US$4,700-4,800/t - and the revenue obtained from the sale of shares in an unnamed company, said BCP. Exploration expenses in the first quarter increased by 170% to US$1.6mn as the company searched for other industrial metals as part of a diversification plan, according to the bank. Minsur is the world's third largest tin miner and the only one in Peru. It operates the San Rafael mine in southern Peru and the Funsur smelter-refinery in Pisco, 220km from capital Lima. At the end of the first quarter tin metal represented 100% of its sales compared to 89% tin metal and 11% concentrates in same-period 2002. The company produced 9,662t of tin in the first quarter, up 8.14% over same-period last year, according to the country's mining ministry.