Favourable Prices Buoy Near-Term Returns for South32, Increasing FVE to AUD 2.30
We raise our fair value estimate for no-moat-rated South32 to AUD 2.30 per share from AUD 2.05. The increase reflects higher near-term commodity prices, particularly alumina, aluminium, coking coal, and manganese ore. Our fiscal 2018 forecasts are USD 400 per tonne, USD 0.96 per pound, USD 197 per tonne, and USD 340 per tonne, respectively. An approximate 6% lift in fiscal 2018 manganese ore guidance to 5.45 million tonnes also benefits while a 9% cut in volume guidance for Illawarra Coal means ...South32 is engaged in mining and metal production from a portfolio of assets for the commodities of alumina, aluminium, bauxite, energy and metallurgical coal, manganese ore, manganese alloy, nickel, silver, lead and zinc. As of June 30 2016, Co. operated 10 segments, which were comprised of: Worsley Alumina, South Africa Aluminium, Brazil Alumina, Mozal Aluminium, South Africa Energy Coal, Illawarra Metallurgical Coal, Australia Manganese, South Africa Manganese, Cerro Matoso, and Cannington.
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