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

Earnings are forecast to grow 15.47% per year

Risk Analysis

Dividend of 4.88% is not well covered by earnings

Large one-off items impacting financial results

Profit margins (5.2%) are lower than last year (17.2%)



Snowflake Analysis

Flawless balance sheet with limited growth.


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

4.7%

S32

2.6%

AU Metals and Mining

2.0%

AU Market


1 Year Return

-13.9%

S32

23.5%

AU Metals and Mining

19.8%

AU Market

Return vs Industry: S32 underperformed the Australian Metals and Mining industry which returned 22% over the past year.

Return vs Market: S32 underperformed the Australian Market which returned 19.4% over the past year.


Shareholder returns

S32IndustryMarket
7 Day4.7%2.6%2.0%
30 Day5.0%4.2%3.8%
90 Day12.3%14.0%5.8%
1 Year-10.4%-13.9%29.7%23.5%25.2%19.8%
3 Year30.5%14.1%64.5%44.3%39.6%20.9%
5 Yearn/a110.6%62.0%61.8%25.3%

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?

26.06x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: S32 (A$2.85) is trading above our estimate of fair value (A$2.71)

Significantly Below Fair Value: S32 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: S32 is poor value based on its PE Ratio (25.5x) compared to the Metals and Mining industry average (13.2x).

PE vs Market: S32 is poor value based on its PE Ratio (25.5x) compared to the Australian market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: S32 is poor value based on its PEG Ratio (1.6x)


Price to Book Ratio

PB vs Industry: S32 is good value based on its PB Ratio (1x) compared to the AU Metals and Mining industry average (1.5x).


Next Steps

Future Growth

How is South32 forecast to perform in the next 1 to 3 years based on estimates from 19 analysts?

15.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: S32's forecast earnings growth (15.5% per year) is above the savings rate (1.1%).

Earnings vs Market: S32's earnings (15.5% per year) are forecast to grow faster than the Australian market (9.6% per year).

High Growth Earnings: S32's earnings are forecast to grow, but not significantly.

Revenue vs Market: S32's revenue is expected to decline over the next 3 years (-0.8% per year).

High Growth Revenue: S32's revenue is forecast to decline over the next 3 years (-0.8% 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 (6.9%).


Next Steps

Past Performance

How has South32 performed over the past 5 years?

49.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: S32 has a large one-off loss of $532.0M impacting its June 30 2019 financial results.

Growing Profit Margin: S32's current net profit margins (5.2%) are lower than last year (17.2%).


Past Earnings Growth Analysis

Earnings Trend: S32 has become profitable over the past 5 years, growing earnings by 49.5% per year.

Accelerating Growth: S32's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: S32 had negative earnings growth (-70.8%) over the past year, making it difficult to compare to the Metals and Mining industry average (7.8%).


Return on Equity

High ROE: S32's Return on Equity (3.8%) is considered low.


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 ($3.4B) exceed its short term liabilities ($1.7B).

Long Term Liabilities: S32's short term assets ($3.4B) exceed its long term liabilities ($2.9B).


Debt to Equity History and Analysis

Debt Level: S32's debt to equity ratio (3.6%) is considered satisfactory.

Reducing Debt: S32's debt to equity ratio has reduced from 67.5% to 3.6% over the past 5 years.

Debt Coverage: S32's debt is well covered by operating cash flow (503.3%).

Interest Coverage: S32's interest payments on its debt are well covered by EBIT (315.3x coverage).


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 9.4x debt).


Next Steps

Dividend

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

4.78%

Current Dividend Yield


Dividend Yield vs Market

company4.8%marketbottom25%2.3%markettop25%5.4%industryaverage4.2%forecastin3Years3.1%

Current dividend yield vs market & industry

Notable Dividend: S32's dividend (4.88%) is higher than the bottom 25% of dividend payers in the Australian market (2.34%).

High Dividend: S32's dividend (4.88%) is low compared to the top 25% of dividend payers in the Australian market (5.47%).


Stability and Growth of Payments

Stable Dividend: S32 has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: S32's dividend payments have increased, but the company has only paid a dividend for 3 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (102.5%), S32's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: S32's dividends in 3 years are forecast to be well covered by earnings (49.1% payout ratio).


Next Steps

Management

What is the CEO of South32's salary, the management and board of directors tenure and is there insider trading?

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 ($USD4.81M) is about average for companies of similar size in the Australian market ($USD3.86M).

Compensation vs Earnings: Graham's compensation has been consistent with company performance over the past year.


Management Age and Tenure

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 Age and Tenure

4.7yrs

Average Tenure

63yo

Average Age

Experienced Board: S32's board of directors are considered experienced (4.7 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyAU$316,531,43016 Dec 19
The Vanguard Group, Inc.
EntityCompany
Shares77,391,537
Max PriceAU$4.09
SellAU$175,296,67816 Dec 19
The Vanguard Group, Inc.
EntityCompany
Shares41,057,925
Max PriceAU$4.27
SellAU$34,119,70802 Dec 19
Schroder Investment Management Limited
EntityCompany
Shares14,225,394
Max PriceAU$2.75
SellAU$39,45002 Dec 19
Schroder Investment Management North America Inc.
EntityCompany
Shares14,144
Max PriceAU$2.79
BuyAU$147,503,51302 Dec 19
Schroder Investment Management Limited
EntityCompany
Shares60,372,154
Max PriceAU$2.96
BuyAU$47,65130 Aug 19
Xolani Mkhwanazi
EntityIndividual
Shares18,900
Max PriceAU$2.52
SellAU$131,880,80215 Jul 19
Schroder Investment Management Limited
EntityCompany
Shares42,244,608
Max PriceAU$3.67
SellAU$11,795,40415 Jul 19
Schroder Investment Management North America Inc.
EntityCompany
Shares3,174,169
Max PriceAU$3.72
BuyAU$216,370,40015 Jul 19
Schroder Investment Management Limited
EntityCompany
Shares64,461,120
Max PriceAU$3.87
BuyAU$3,453,65615 Jul 19
Schroder Investment Management North America Inc.
EntityCompany
Shares1,102,668
Max PriceAU$3.13
BuyAU$60,12108 Apr 19
Ntombifuthi Temperance Mtoba
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares15,481
Max PriceAU$3.88
BuyAU$64,12621 Feb 19
Ntombifuthi Temperance Mtoba
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares16,500
Max PriceAU$3.89

Ownership Breakdown

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


Management Team

  • Graham Kerr (48yo)

    CEO, MD & Executive Director

    • Tenure: 5.3yrs
    • Compensation: US$6.98m
  • Alex Volante

    Head of Investor Relations

    • Tenure: 1.8yrs
  • Melanie Williams (38yo)

    VP of Legal Corporate & Company Secretary

    • Tenure: 3.4yrs
  • Mike Fraser (54yo)

    Chief Operating Officer

    • Tenure: 1.8yrs
    • Compensation: US$3.43m
  • Nicole Duncan (47yo)

    Chief People & Legal Officer and Company Secretary

    • Tenure: 5.1yrs
  • Paul Harvey (56yo)

    Chief Operating Officer

    • Tenure: 1.8yrs
    • Compensation: US$3.01m
  • Rowena Smith (52yo)

    Chief Sustainability Officer

    • Tenure: 2.4yrs
  • Vanessa Torres (49yo)

    Chief Technology Officer

    • Tenure: 1.4yrs
  • Simon Collins (46yo)

    Chief Development Officer

    • Tenure: 1.3yrs
  • Katie Tovich (49yo)

    Chief Financial Officer

    • Tenure: 0.7yrs
    • Compensation: US$940.00k

Board Members

  • Keith Rumble (65yo)

    Independent Non-Executive Director

    • Tenure: 4.9yrs
    • Compensation: US$339.00k
  • Karen Wood (63yo)

    Independent Chairman of the Board

    • Tenure: 0.8yrs
    • Compensation: US$376.00k
  • Frank Cooper (63yo)

    Independent Non Executive Director

    • Tenure: 4.7yrs
    • Compensation: US$302.00k
  • Guy Lansdown (58yo)

    Additional Independent Non-Executive Director

    • Tenure: 0.08yrs
  • Wayne Osborn (68yo)

    Independent Non-Executive Director

    • Tenure: 4.7yrs
    • Compensation: US$318.00k
  • Futhi Temperance Mtoba (64yo)

    Independent Non-Executive Director

    • Tenure: 4.7yrs
    • Compensation: US$294.00k
  • Graham Kerr (48yo)

    CEO, MD & Executive Director

    • Tenure: 5.3yrs
    • Compensation: US$6.98m
  • Xiaoling Liu (63yo)

    Independent Non-Executive Director

    • Tenure: 2.2yrs
    • Compensation: US$286.00k

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$13.995b
  • Shares outstanding: 4.86b
  • 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 Analysis2020/01/20 10:46
End of Day Share Price2020/01/20 00:00
Earnings2019/06/30
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.