Selected Reads

Smartkarma

Equity Bottom-Up

First up, the big one, South32 (S32) finally shared an update on Groote Eylandt amongst their quarterly. Then, we got into the detail at Ramelius (RMS) who had a bumper quarter and onto Base Resources (BSE) who copped a huge takeover premium from American-listed Energy Fuels (UUUU.nyse).We then ventured to Bosnia to talk about Adriatic’s (ADT’s) decision to go owner-operator, followed by 29Metals (29M) who got offtake financing and provided an insurance update, Boss Energy (BOE) who finally…

Morningstar

Morningstar, Inc.

The sell-off in base metals, thermal coal, aluminium and alumina, and manganese prices has been a key driver of the decline in South32’s share price. It peaked at AUD 4.25 in October 2018 and now sits about 30% lower around AUD 3.00 per share. The S&amp;P/ASX 200 index has increased almost 7% in the same period. With the lower share price, South32’s shares are fairly valued and trade in line with our unchanged AUD 3.00 per share fair value estimate for no-moat-rated South32
Fourth-quarter…

After peaking at around AUD 4.25 per share in October 2018, no-moat South32 shares have sold off by almost one fourth. The price pullback means the shares are now close to fairly valued. This is despite reducing our fair value estimate slightly to AUD 3.00 per share from AUD 3.10 previously. The reduction primarily reflects declines in the spot prices for nickel and zinc. The lower AUD/USD exchange rate, below 0.70, is a partial offset. The base metals and manganese price sell-off is the key…

Spun out from BHP in 2015, South32 is one of few global midtier diversified miners. Commodity exposures include alumina, aluminium, manganese ore, manganese alloys, coal, nickel, lead, zinc and silver. However, with the exception of silver, all are tied to China's fixed-asset investment boom, which we think faces meaningful headwinds in future. The generally bottom half of the cost curve operating cost positions and robust balance sheet are positives. However, we think most of South32's…

No-moat rated South32 delivered solid first-half 2019 results with 18% growth in adjusted net profit to USD 642 million versus the same period last year. The performance was largely driven by record production in Australia Manganese and higher commodity prices. Underlying EBIT grew 28% to USD 925 million, with higher prices adding USD 223 million and volumes USD 216 million versus a year ago. Production guidance is unchanged and output at South32 is tracking in line with our expectations. In its…

Australia

South32 Limited operates as a diversified metals and mining company. The Company produces alumina, aluminum, coal, manganese, nickel, silver, lead, and zinc. South32 conducts business globally.

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