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South32 Ltd S32

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Stock XASX Rating as of
A$3.82 −0.03 (0.78%)
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As of Delayed Price Pre-Open: A$3.85 +0.03
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Company Report

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Commodity Price Update Q3 2024: Value in Mineral Sands, Gold, and Thermal Coal

Jon Mills

Base metals prices surged earlier in the June quarter of 2024 before partially reversing due to concerns over China’s economy. Iron ore prices are broadly stable despite China's struggling property market and weak infrastructure spending, leading to questions over China's steel demand. After updating our commodity price assumptions, no-moat Iluka is the cheapest miner we cover, trading 31% below its unchanged fair value estimate of AUD 9.50.

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Price vs Fair Value

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S32 is trading at a 859% premium.
Price
A$3.82
Fair Value
A$4.11
Uncertainty
High
1-Star Price
A$5.17
5-Star Price
A$5.75
Economic Moat
Hhv
Capital Allocation
Tlgqpyvd

Bulls Say, Bears Say

Bulls

South32 is a beneficiary of continued global population growth, urbanization and increased demand for commodities from industrialization.

Bears

The desire to diversify earnings into base metals and the need to eventually replace depletion presents a longer-term risk for missteps, with a major acquisition the key risk to the balance sheet.

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Trading Information

Previous Close Price
A$3.85
Day Range
A$3.80–3.87
52-Week Range
A$2.75–4.02
Bid/Ask
A$4.01 / A$3.63
Market Cap
A$17.30 Bil
Volume/Avg
106,003 / 18.9 Mil

Key Statistics

Price/Earnings (Normalized)
26.80
Price/Sales
1.67
Dividend Yield (Trailing)
1.46%
Dividend Yield (Forward)
1.46%
Total Yield
2.42%

Company Profile

South32 was born of the demerger of noncore assets from BHP in 2015. South32’s major operations include alumina businesses in Australia and Brazil, aluminum in Brazil, South Africa, and Mozambique, and manganese businesses in Australia and South Africa. It has agreed to sell New South Wales metallurgical coal, likely effective late 2024. It also owns the Cannington silver/lead/zinc mine in northwest Queensland and the Cerro Matoso nickel mine in Colombia. Cannington and manganese operations deliver high returns, but have relatively short reserve life. The company acquired Arizona Mining, which brings with it the high-grade and likely low-cost Taylor project in the US, and also entered the copper business in 2022 via the purchase of a 45% stake in the Sierra Gorda mine in Chile.
Sector
Basic Materials
Industry
Other Industrial Metals & Mining
Stock Style Box
Large Value
Total Number of Employees
9,000
Website
https://www.south32.net

Competitors

Valuation

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Metric
S32
RIO
GLEN
Price/Earnings (Normalized)
 26.8011.3210.05
Price/Book Value
 1.282.491.72
Price/Sales
 1.672.460.35
Price/Cash Flow
 12.558.0410.34
Price/Earnings
S32
RIO
GLEN

Financial Strength

Metric
S32
RIO
GLEN
Quick Ratio
 1.001.040.35
Current Ratio
 1.841.691.29
Interest Coverage
 −2.828.042.91
Quick Ratio
S32
RIO
GLEN

Profitability

Metric
S32
RIO
GLEN
Return on Assets (Normalized)
 2.66%11.84%5.31%
Return on Equity (Normalized)
 4.10%22.48%14.49%
Return on Invested Capital (Normalized)
 3.39%19.38%11.14%
Return on Assets
S32
RIO
GLEN
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