ASX:S32

Stock Analysis Report

Executive Summary

South32 Limited operates as a diversified metals and mining company primarily in Australia, Southern Africa, North America, and South America.

Rewards

Trading at 64.6% below its fair value

Earnings are forecast to grow 26.35% per year

Risk Analysis

No risks detected for S32 from our risk checks.


Snowflake Analysis

Excellent balance sheet and fair value.


Similar Companies

Share Price & News

How has South32's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: S32 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-2.7%

S32

0.3%

AU Metals and Mining

0.03%

AU Market


1 Year Return

-33.2%

S32

5.8%

AU Metals and Mining

14.6%

AU Market

Return vs Industry: S32 underperformed the Australian Metals and Mining industry which returned 5.8% over the past year.

Return vs Market: S32 underperformed the Australian Market which returned 14.6% over the past year.


Shareholder returns

S32IndustryMarket
7 Day-2.7%0.3%0.03%
30 Day-7.9%-6.0%-0.4%
90 Day-3.0%5.3%5.7%
1 Year-30.4%-33.2%11.3%5.8%19.7%14.6%
3 Year19.0%4.1%57.2%38.1%38.7%20.2%
5 Yearn/a83.7%40.4%50.7%17.1%

Price Volatility Vs. Market

How volatile is South32's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is South32 undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: S32 (A$2.56) is trading below our estimate of fair value (A$7.24)

Significantly Below Fair Value: S32 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: S32 is unprofitable, so we can't compare its PE Ratio to the Metals and Mining industry average.

PE vs Market: S32 is unprofitable, so we can't compare its PE Ratio to the Australian market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate S32's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: S32 is good value based on its PB Ratio (0.8x) compared to the AU Metals and Mining industry average (1.4x).


Next Steps

Future Growth

How is South32 forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

26.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: S32 is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.1%).

Earnings vs Market: S32 is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: S32's is expected to become profitable in the next 3 years.

Revenue vs Market: S32's revenue (2.7% per year) is forecast to grow slower than the Australian market (4.2% per year).

High Growth Revenue: S32's revenue (2.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: S32's Return on Equity is forecast to be low in 3 years time (7%).


Next Steps

Past Performance

How has South32 performed over the past 5 years?

48.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: S32 is currently unprofitable.

Growing Profit Margin: S32 is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: S32 is unprofitable, but has reduced losses over the past 5 years at a rate of 48.2% per year.

Accelerating Growth: Unable to compare S32's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: S32 is unprofitable, making it difficult to compare its past year earnings growth to the Metals and Mining industry (14.8%).


Return on Equity

High ROE: S32 has a negative Return on Equity (-1.48%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is South32's financial position?


Financial Position Analysis

Short Term Liabilities: S32's short term assets ($3.1B) exceed its short term liabilities ($1.5B).

Long Term Liabilities: S32's short term assets ($3.1B) exceed its long term liabilities ($3.1B).


Debt to Equity History and Analysis

Debt Level: S32's debt to equity ratio (4.4%) is considered satisfactory.

Reducing Debt: S32's debt to equity ratio has reduced from 25.1% to 4.4% over the past 5 years.


Balance Sheet

Inventory Level: S32 has a high level of physical assets or inventory.

Debt Coverage by Assets: S32's debt is covered by short term assets (assets are 7x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: S32 has been profitable on average in the past, therefore cash runway is not a concern.

Forecast Cash Runway: S32 has been profitable on average in the past, therefore cash runway is not a concern.


Next Steps

Dividend

What is South32's current dividend yield, its reliability and sustainability?

1.28%

Current Dividend Yield


Upcoming Dividend Payment

Purchase South32 before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.3%marketbottom25%2.3%markettop25%5.3%industryaverage4.4%forecastin3Years3.6%

Current dividend yield vs market & industry

Notable Dividend: S32's dividend (1.28%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.29%).

High Dividend: S32's dividend (1.28%) is low compared to the top 25% of dividend payers in the Australian market (5.35%).


Stability and Growth of Payments

Stable Dividend: S32 is not paying a notable dividend for the Australian market, therefore no need to check if payments are stable.

Growing Dividend: S32 is not paying a notable dividend for the Australian market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: S32 is not paying a notable dividend for the Australian market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of S32's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure


CEO

Graham Kerr (48yo)

5.3yrs

Tenure

US$6,979,000

Compensation

Mr. Graham Kerr, BBus, FCPA, has been the Chief Executive Officer and Managing Director of South32 Limited since August 2014 and December 9, 2015 respectively. He is responsible for running all facets of t ...


CEO Compensation Analysis

Compensation vs Market: Graham's total compensation ($USD4.63M) is above average for companies of similar size in the Australian market ($USD2.92M).

Compensation vs Earnings: Graham's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Graham Kerr
CEO, MD & Executive Director5.3yrsUS$6.98m0.068% $8.4m
Katie Tovich
Chief Financial Officer0.8yrsUS$940.00k0.0033% $409.8k
Mike Fraser
Chief Operating Officer1.8yrsUS$3.43m0.052% $6.4m
Paul Harvey
Chief Operating Officer1.8yrsUS$3.01m0.016% $2.0m
Vanessa Torres
Chief Technology Officer1.5yrsno datano data
Alex Volante
Head of Investor Relations1.8yrsno datano data
Nicole Duncan
Chief People & Legal Officer and Company Secretary5.2yrsno datano data
Rowena Smith
Chief Sustainability Officer2.5yrsno datano data
Simon Collins
Chief Development Officer1.3yrsno datano data
Melanie Williams
VP of Legal Corporate & Company Secretary3.5yrsno datano data

1.8yrs

Average Tenure

49yo

Average Age

Experienced Management: S32's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Graham Kerr
CEO, MD & Executive Director5.3yrsUS$6.98m0.068% $8.4m
Keith Rumble
Independent Non-Executive Director5yrsUS$339.00k0.012% $1.5m
Karen Wood
Independent Chairman of the Board0.8yrsUS$376.00k0.0076% $941.3k
Frank Cooper
Independent Non Executive Director4.8yrsUS$302.00k0.0026% $327.8k
Guy Lansdown
Additional Independent Non-Executive Director0.2yrsno datano data
Wayne Osborn
Independent Non-Executive Director4.8yrsUS$318.00k0.0026% $321.6k
Ntombifuthi Temperance Mtoba
Independent Non-Executive Director4.8yrsUS$294.00k0.0014% $177.6k
Xiaoling Liu
Independent Non-Executive Director2.3yrsUS$286.00k0.0012% $154.0k

4.8yrs

Average Tenure

63yo

Average Age

Experienced Board: S32's board of directors are considered experienced (4.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

South32 Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: South32 Limited
  • Ticker: S32
  • Exchange: ASX
  • Founded: 2000
  • Industry: Diversified Metals and Mining
  • Sector: Materials
  • Market Cap: AU$12.418b
  • Shares outstanding: 4.85b
  • Website: https://www.south32.net

Number of Employees


Location

  • South32 Limited
  • 108 St Georges Terrace
  • Level 47
  • Perth
  • Western Australia
  • 6000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
S32ASX (Australian Securities Exchange)YesOrdinary SharesAUAUDMay 2015
S32JSE (The Johannesburg Securities Exchange)YesOrdinary SharesZAZARMay 2015
S32LSE (London Stock Exchange)YesOrdinary SharesGBGBPMay 2015
32ZDB (Deutsche Boerse AG)YesOrdinary SharesDEEURMay 2015
S32JSE (The Johannesburg Securities Exchange)YesOrdinary SharesZAAUDMay 2015
S32CHIA (Chi-X Australia)YesOrdinary SharesAUAUDMay 2015
SHTL.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDMay 2015
S32LBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPMay 2015
SOUH.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDMay 2015

Biography

South32 Limited operates as a diversified metals and mining company primarily in Australia, Southern Africa, North America, and South America. The company has a portfolio of assets producing alumina, aluminum, bauxite, energy and metallurgical coal, manganese ore and alloy, ferronickel, silver, lead, and zinc. It also exports its products. The company was formerly known as BHP Coal Holdings Pty Limited and changed its name to South32 Limited in March 2015. South32 Limited was incorporated in 2000 and is headquartered in Perth, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/22 10:43
End of Day Share Price2020/02/21 00:00
Earnings2019/12/31
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.