South32 (SOUHY) AI Stock Analysis

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South32

(OTC:SOUHY)

Rating:55Neutral

Price Target:

$10.00

▲(12.36% Upside)

South32's overall stock score reflects a company with notable strengths in strategic initiatives and production growth, as highlighted in the earnings call. However, significant financial challenges persist, including profitability issues and liquidity concerns. The high valuation further tempers the score, indicating potential risks for investors.

South32 (SOUHY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$7.99B

Dividend Yield3.63%

Average Volume (3M)9.97K

Price to Earnings (P/E)30.9

Beta (1Y)1.13

Revenue Growth4.84%

EPS GrowthN/A

CountryUS

Employees9,906

SectorBasic Materials

Sector Strength73

IndustryIndustrial Materials

Share Statistics

EPS (TTM)0.29

Shares Outstanding900,727,050

10 Day Avg. Volume9,970

30 Day Avg. Volume9,972

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.07

Enterprise Value/Revenue1.55

Enterprise Value/Gross Profit2.95

Enterprise Value/Ebitda4.91

Forecast

1Y Price Target

$10.00

Price Target Upside12.36% Upside

Rating ConsensusHold

Number of Analyst Covering0

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 extraction and sale of minerals and metals. Its key revenue streams include the production and sale of alumina and aluminum, which are used in a range of industrial applications; the mining and export of coal, primarily used for energy generation and steel production; and the extraction and sales of manganese, nickel, silver, lead, and zinc, which have various industrial and commercial uses. The company benefits from long-term contracts and relationships with major industrial clients and leverages its diversified operations to mitigate risks associated with fluctuating commodity prices. Strategic partnerships and joint ventures also play a role in optimizing production and expanding market reach.

South32 Earnings Call Summary

Earnings Call Date:Aug 27, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Feb 12, 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's financial performance shows mixed results. The income statement reveals negative net income and declining revenues, indicating profitability challenges. However, the balance sheet remains strong with a healthy equity base and manageable leverage, despite some asset declines. Cash flow concerns are evident with negative free cash flow and inefficiencies in cash conversion, posing liquidity risks.

Income Statement

Neutral

South32's income statement shows significant volatility in profitability. The gross profit margin saw fluctuations, with the most recent year showing a decrease in total revenue and gross profit. The net income has been negative for recent years, impacting the net profit margin negatively. EBIT and EBITDA margins are negative for the most recent year, indicating operational challenges. Revenue growth has also been inconsistent, with a sharp decline in the latest period, reflecting potential market or operational difficulties.

Balance Sheet

Positive

The balance sheet remains relatively strong with a healthy equity base and an improving debt-to-equity ratio, suggesting manageable leverage. However, the decline in total assets and stockholder's equity compared to previous years indicates some potential risks. The equity ratio remains favorable, demonstrating stability in assets financing.

Cash Flow

Neutral

Cash flow analysis shows a decline in free cash flow and operating cash flow, reflecting potential liquidity concerns. The free cash flow has turned negative in the latest year, impacting the company's ability to reinvest or pay dividends. The operating cash flow to net income ratio indicates inefficiencies in converting sales to cash, a potential risk for long-term operations.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.48B	5.65B	9.27B	5.48B	5.01B
Gross Profit	2.53B	2.56B	3.82B	1.01B	2.04B
EBITDA	141.00M	416.00M	4.47B	769.00M	932.00M
Net Income	-203.00M	-173.00M	2.67B	-195.00M	-65.00M
Balance Sheet
Total Assets	14.24B	14.56B	16.34B	13.24B	13.74B
Cash, Cash Equivalents and Short-Term Investments	842.00M	1.26B	2.37B	1.61B	1.31B
Total Debt	1.57B	1.74B	1.83B	1.21B	1.02B
Total Liabilities	5.27B	5.19B	5.56B	4.29B	4.17B
Stockholders Equity	8.96B	9.38B	10.78B	8.96B	9.56B
Cash Flow
Free Cash Flow	-2.00M	303.00M	2.48B	815.00M	628.00M
Operating Cash Flow	1.12B	1.19B	3.07B	1.41B	1.36B
Investing Cash Flow	-1.11B	-908.00M	-2.10B	-608.00M	-873.00M
Financing Cash Flow	-417.00M	-1.39B	-215.00M	-501.00M	-562.00M

South32 Technical Analysis

Technical Analysis Sentiment

Negative

Last Price8.90

Price Trends

50DMA

9.65

Negative

100DMA

9.46

Negative

200DMA

10.20

Negative

Market Momentum

MACD

-0.17

Positive

RSI

37.79

Neutral

STOCH

21.35

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOUHY, the sentiment is Negative. The current price of 8.9 is below the 20-day moving average (MA) of 9.50, below the 50-day MA of 9.65, and below the 200-day MA of 10.20, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 37.79 is Neutral, neither overbought nor oversold. The STOCH value of 21.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SOUHY.

South32 Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BHP	77 Outperform	$143.42B	15.71	19.51%	4.42%	-7.86%	14.17%
RIO	75 Outperform	$106.59B	9.90	18.18%	5.94%	-0.44%	-4.20%
VALE	74 Outperform	$43.66B	8.54	13.49%	7.79%	-12.89%	-46.86%
Sector *	61 Neutral	$10.26B	6.13	0.71%	2.93%	3.45%	-36.02%
MP	60 Neutral	$12.60B	―	-9.57%	―	39.42%	-172.40%
SOUHY	55 Neutral	$7.99B	30.93	3.56%	3.63%	4.84%	―
NEXA	48 Neutral	$646.30M	―	-9.63%	2.07%	8.66%	66.06%

* Basic Materials Sector Average

Performance Comparison

SOUHY

South32

8.90

-1.23

-12.14%

BHP

BHP Group

55.77

5.85

11.72%

RIO

Rio Tinto

62.72

5.86

10.31%

VALE

Vale SA

10.28

0.98

10.54%

NEXA

Nexa Resources SA

4.88

-0.98

-16.72%

MP Materials

71.14

58.18

448.92%

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.Date of analysis: Jul 30, 2025