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South32 Limited (SOUHY)
OTHER OTC:SOUHY
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South32
(OTC:SOUHY)
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Rating:60Neutral
Price Target:
$14.50
▲(13.64% Upside)
The score is driven primarily by mixed financial performance (stable balance sheet but weaker profitability and free-cash-flow conversion) and a strong uptrend that looks overextended. A high P/E valuation meaningfully weighs on the overall score despite the modest dividend yield.
Positive Factors
Diversified commodity portfolio
A broad mix of metals and geographies reduces single-commodity and regional cycle exposure, supporting more stable revenue over time. Multiple end markets (steel, batteries, construction, energy) let management shift focus and capital to higher-return segments as structural demand evolves.
Conservative leverage
Very low leverage gives the company durable financial flexibility to fund capex, weather commodity downturns, and pursue strategic investments without straining liquidity. This strengthens resilience against cyclical revenue swings and supports long-term operational continuity.
Operational modernization partnership
Deploying integrated remote operations and smart asset management is a structural upgrade that can sustainably reduce operating costs, improve safety and environmental performance, and raise throughput. This modernization enhances competitiveness and scalability across future projects.
Negative Factors
Low profitability margins
Persistently low net margins limit retained earnings and the ability to reinvest or pay higher dividends. Over the medium term, modest margins constrain capital allocation flexibility and heighten vulnerability to input cost inflation, making it harder to deliver attractive shareholder returns.
Weak free cash flow conversion
Declining FCF and a low FCF-to-net-income ratio reduce internally available funding for maintenance capex, growth projects, and debt reduction. This structural weakness can force reliance on external financing or asset sales, constraining strategic optionality over multiple cycles.
Declining returns and margin pressure
A falling ROE and shrinking gross margins signal deteriorating capital efficiency and rising cost or pricing pressures. Over the medium term, this reduces the firm's ability to generate attractive returns on invested capital, undermining growth prospects and investment appeal.
South32 (SOUHY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.38B
Dividend Yield2.48%
Average Volume (3M)8.54K
Price to Earnings (P/E)48.2
Beta (1Y)1.15
Revenue Growth4.84%
EPS GrowthN/A
CountryUS
Employees9,906
SectorBasic Materials
Sector Strength58
IndustryIndustrial Materials
Share Statistics
EPS (TTM)0.31
Shares Outstanding897,297,100
10 Day Avg. Volume0
30 Day Avg. Volume8,536
Financial Highlights & Ratios
PEG Ratio-0.18
Price to Book (P/B)0.97
Price to Sales (P/S)1.49
P/FCF Ratio25.86
Enterprise Value/Market Cap0.69
Enterprise Value/Revenue1.47
Enterprise Value/Gross Profit3.38
Enterprise Value/Ebitda9.49
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
South32 Business Overview & Revenue Model
Company DescriptionSouth32 Limited operates as a diversified metals and mining company in Australia, Southern Africa, North America, and South America. The company operates through Worsley Alumina, Hillside Aluminium, Mozal Aluminium, Brazil Alumina, Illawarra Metallurgical Coal, Eagle Downs Metallurgical Coal, Australia Manganese, South Africa Managanese, Cerro Matoso, Cannington, Hermosa, and South Africa Energy Coal segments. It has a portfolio of assets producing alumina, aluminum, bauxite, energy and metallurgical coal, manganese ore and alloy, ferronickel, silver, lead, zinc, and other base metals. The company also exports its products. South32 Limited has a strategic alliance agreement with AusQuest Limited for exploration opportunity in gold-copper targets at the Gunanya Project. The company was formerly known as BHP Coal Holdings Pty Limited and changed its name to South32 Limited. South32 Limited was incorporated in 2000 and is headquartered in Perth, Australia.
How the Company Makes MoneySouth32 generates revenue primarily through the sale of its mined products, which include aluminum, manganese, nickel, silver, zinc, and coal. The company operates a revenue model based on the extraction, processing, and marketing of these minerals and metals. Key revenue streams include the sale of aluminum products to industries such as automotive and construction, manganese ore to steel manufacturers, nickel for battery production, and coal for energy generation. Additionally, South32 engages in long-term contracts and spot market sales, allowing it to adapt to market conditions. The company also benefits from strategic partnerships and joint ventures that enhance its operational efficiency and market reach, contributing to its overall earnings.
South32 Earnings Call Summary
Earnings Call Date:Feb 12, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Feb 11, 2026
Earnings Call Sentiment Neutral
The earnings call presented a strong financial performance with significant increases in EBITDA, earnings, and cash flow, alongside strategic approvals for future projects. However, the call also highlighted some serious challenges, including a tragic incident and impacts from civil unrest and natural disasters.Q2-2025 Updates
Positive Updates
Strong Financial Performance
Delivered a 44% increase in underlying EBITDA to $1 billion and an increase in underlying earnings of $375 million. Cash flow from operations improved by $361 million, despite a build in working capital.
Decrease in Net Debt
Reduced net debt by $715 million to $47 million, maintaining a strong balance sheet.
Production Increases
Aluminum production increased by 5% and copper equivalent production increased by 21% at Sierra Gorda.
Worsley Mine Development Approvals
Received primary state and federal environmental approvals for the Worsley mine development project, expected to sustain production to at least FY '36.
Capital Management and Shareholder Returns
Announced a fully franked interim ordinary dividend of $154 million at $0.034 per share and continuation of the capital management program with $171 million remaining for shareholder returns.
Negative Updates
Tragic Incident at Cerro Matoso
In September, a colleague, José Luis Pérez, was fatally injured in an incident at Cerro Matoso.
Civil Unrest Impacting Mozal Aluminium
Updated production guidance for Mozal Aluminium due to ongoing civil unrest in Mozambique.
Insurance and Recovery Challenges at GEMCO
Significant damage from Cyclone Megan has required extensive recovery efforts, with $350 million recovered from insurance to date.
Company Guidance
During the call, Graham Kerr provided guidance on several key metrics for the first half of FY '25 and beyond. The company achieved a 44% increase in underlying EBITDA, reaching $1 billion, and a $375 million increase in underlying earnings. Cash flow from operations improved by $361 million, contributing to a reduction in net debt by $715 million to $47 million. The company announced a fully franked interim ordinary dividend of $154 million at $0.034 per share and plans to return $171 million to shareholders through its capital management program. Aluminum production increased by 5%, while copper equivalent production at Sierra Gorda rose by 21%. The company maintained production guidance across its operations, except for Mozal Aluminium, due to ongoing civil unrest in Mozambique. Looking ahead, the Worsley mine development project received environmental approvals, expected to sustain production until at least FY '36. The phased restart of mining activities at GEMCO is anticipated to boost export sales in June 2025, contingent on weather conditions. The company remains focused on reducing operating unit costs in the second half of FY '25 and expects a strong cash flow generation with an unwinding of working capital.South32 Financial Statement Overview
Summary
South32 demonstrates a mixed financial performance. The company shows resilience with revenue growth and a stable balance sheet, but profitability and cash flow generation remain areas of concern. While leverage is low, indicating financial stability, the company needs to focus on improving profitability margins and cash flow conversion to enhance overall financial health.Income Statement
South32's income statement shows a mixed performance. The company has experienced a recent revenue growth of 4.7% in 2025, recovering from a decline in previous years. However, profitability margins such as the net profit margin (3.7%) and EBIT margin (14.3%) are relatively low, indicating challenges in maintaining high profitability. The gross profit margin has decreased from previous years, suggesting increased cost pressures.65
Positive
Balance Sheet
The balance sheet reflects a stable financial position with a low debt-to-equity ratio of 0.18, indicating conservative leverage. The equity ratio is strong, and the company maintains a positive return on equity of 2.4%, although it has decreased from prior years. Overall, the balance sheet suggests financial stability but with room for improvement in generating returns.70
Positive
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth, which was -15% in 2025, indicating potential liquidity concerns. The operating cash flow to net income ratio is healthy at 0.85, suggesting efficient cash generation relative to net income. However, the free cash flow to net income ratio is low at 0.25, highlighting challenges in converting earnings into free cash flow.60
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.78B | 5.78B | 5.48B | 5.65B | 9.27B | 5.48B |
| Gross Profit | 2.52B | 2.52B | 2.53B | 2.56B | 3.82B | 1.01B |
| EBITDA | 897.08M | 1.34B | 141.00M | 416.00M | 4.47B | 769.00M |
| Net Income | 212.95M | 213.00M | -203.00M | -173.00M | 2.67B | -195.00M |
Balance Sheet | ||||||
| Total Assets | 13.73B | 13.73B | 14.24B | 14.56B | 16.34B | 13.24B |
| Cash, Cash Equivalents and Short-Term Investments | 1.68B | 1.68B | 842.00M | 1.26B | 2.37B | 1.61B |
| Total Debt | 1.63B | 1.63B | 1.57B | 1.74B | 1.83B | 1.21B |
| Total Liabilities | 4.87B | 4.87B | 5.27B | 5.19B | 5.56B | 4.29B |
| Stockholders Equity | 8.85B | 8.85B | 8.96B | 9.38B | 10.78B | 8.96B |
Cash Flow | ||||||
| Free Cash Flow | 299.08M | 332.00M | -2.00M | 303.00M | 2.48B | 815.00M |
| Operating Cash Flow | 1.34B | 1.33B | 1.12B | 1.19B | 3.07B | 1.41B |
| Investing Cash Flow | -18.39M | -20.00M | -1.11B | -908.00M | -2.10B | -608.00M |
| Financing Cash Flow | -405.56M | -405.00M | -417.00M | -1.39B | -215.00M | -501.00M |
South32 Technical Analysis
Positive
12.76
Price Trends
11.31
Positive
10.34
Positive
9.83
Positive
Market Momentum
0.61
Negative
80.90
Negative
99.80
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOUHY, the sentiment is Positive. The current price of 12.76 is above the 20-day moving average (MA) of 12.25, above the 50-day MA of 11.31, and above the 200-day MA of 9.83, indicating a bullish trend. The MACD of 0.61 indicates Negative momentum. The RSI at 80.90 is Negative, neither overbought nor oversold. The STOCH value of 99.80 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SOUHY.
South32 Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $62.69B | 11.58 | 13.65% | 10.04% | -8.49% | -41.69% | |
77 Outperform | $145.13B | 13.59 | 18.18% | 4.60% | -0.44% | -4.20% | |
73 Outperform | $167.55B | 18.60 | 19.51% | 3.55% | -7.86% | 14.17% | |
69 Neutral | $3.09B | 162.76 | 2.08% | 0.43% | 3.93% | -73.94% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
61 Neutral | $11.82B | -98.23 | -6.83% | ― | 26.44% | -95.87% | |
60 Neutral | $12.38B | 48.19 | 3.56% | 2.48% | 4.84% | ― |
* Basic Materials Sector Average
SOUHY
South32
13.90
3.37
32.02%
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34.93%
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MP
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229.42%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.