Thoughts on South32 (S32) post update?

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Question asked 27/07/2024

Thoughts on South32 (S32) post update?

Dear MM, Thanks for your excellent service, as always. S32 was heavily sold off on the back of its Quarterly result released yesterday Mon 22 July. Do you feel it was oversold? Interested in your take on the Quarterly, and the share price reaction. Thanks, Young

Answer

Hi Young,

We looked at S32‘s result earlier in the week after its result, a couple of standout points:

The company flagged major impairments across two assets, calling out slightly soft 4Q24 production and downgrading FY25 production guidance.
The Worsley Alumina impairment grabbed many of the headlines, they noted that the WA Governments imposed environmental conditions create “significant operating challenges and impacted its LT viability” – an appeal will be forthcoming.

Clearly a disappointing update with the weakness to be expected but we believe its overdone, we are long S32 in our Active Growth Portfolio which is never pleasant but with the miners finding support into the most recent weakness we don’t plan to exit.

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South32 Ltd (S32)

LAST UPDATED 25/07/2024 11:25

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