S32 - South32 Limited

[divs4ever]

Enjoy the team collaboration at ASF and Merry Christmas @JohnDe .
I am cautiously optimistic for 2022. Corona is a gamble.
I am now 60 pc cash today from 38 pc cash . Could be a fatal error . Time will tell me in 2022.

i have a differing view and strategy .. apart from wishing EVERYBODY a Merry Christmas , on that i absolutely agree

i would rather my existing cash reserves was wisely invested , but special divs and M&A have decided to boost the cash reserves , anyway

i see a mess that stumbles on , but maybe i can hook a silver lining or several

good luck everybody

 

[finicky]

Looks quite likely that S32 will end the year at an all time monthly high with a big white monthly candle. There was a warning sign a couple of months back with the long upper wick but chart still looking strong. At some point I expect this stock to paricipate in a massive down move with the rest of the market but this is one I will be holding onto for the reflation and S32's long term prospects. If I were wanting to hold onto my current gains though I would be checking out the weekly and monthly charts each week/month as the price is not clear yet of the past top.
Based on past results I see the price as still a bit below fair value by my crude valuation approach does not benefit from any deep knowledge of the business. And S32 spent a year falling well below intrinsic value so it could happen again.

All Data Monthly

 

[Miner]

i have a differing view and strategy .. apart from wishing EVERYBODY a Merry Christmas , on that i absolutely agree

i would rather my existing cash reserves was wisely invested , but special divs and M&A have decided to boost the cash reserves , anyway

i see a mess that stumbles on , but maybe i can hook a silver lining or several

good luck everybody

Mate @divs4ever
Point taken.
You are an astute investor and I always recognize that your strategy will be always stand out than gambling strategies (or no strategies) like me .
Have a good and safe break my friend with a lovely Chrissy.
Regards

 

[divs4ever]

i just realized i needed special strategies to rush the outcome

for the record in my younger days i used to gamble a lot in various arenas ( using unusual strategies ) in those days i had more opportunities to recover from wipe-outs , now i don't

BTW i still gamble i bought CWN ( since sold at a profit ) TAH , TTS ( swallowed up by TAH ) and DNA ( a serial stumbler )

and urge everyone to uniquely adapt their strategies where they see a need to ( say , to resist inflation ) or they see a vein of silver to exploit ( safely )

back to S32 i see they have resisted the speculated acquisitions when they demerged , time will tell if that is ultimately a good thing ( compared to hasty expansion )

is S32 playing the mining investment cycle as i thought ( incorrectly ) should play out

 

[rederob]

Looks quite likely that S32 will end the year at an all time monthly high with a big white monthly candle. There was a warning sign a couple of months back with the long upper wick but chart still looking strong. At some point I expect this stock to paricipate in a massive down move with the rest of the market but this is one I will be holding onto for the reflation and S32's long term prospects. If I were wanting to hold onto my current gains though I would be checking out the weekly and monthly charts each week/month as the price is not clear yet of the past top.
Based on past results I see the price as still a bit below fair value by my crude valuation approach does not benefit from any deep knowledge of the business. And S32 spent a year falling well below intrinsic value so it could happen again.

All Data Monthly
View attachment 134727

Nearing long term resistance:

Most of S32's commodities are likely to continue to maintain or improve their prices into 2022 as I see things unfolding.
Divesting thermal coal was also a good move, while their coking coal assets should perform strongly next year.
The past year saw shipping costs thwart S32's profits and I anticipate this will ameliorate in 2022.
Cap the above off with their ongoing share buyback and S32 could well cruise through next year well above $4.

 

[mullokintyre]

S32 quarterly out shows how much inflationary pressures are affecting OZ companies.
The company had higher prices for both coal and Aluminium, which resulted in higher operating margins for those products.
This was offset by higher material prices, higher labour costs as well as scarce labour ,enegy costs as well as a number of adverse weather costs contributed to a higher than expected operating unit costs overall.
Mick

 

[sptrawler]

S32 quarterly out shows how much inflationary pressures are affecting OZ companies.
The company had higher prices for both coal and Aluminium, which resulted in higher operating margins for those products.
This was offset by higher material prices, higher labour costs as well as scarce labour ,enegy costs as well as a number of adverse weather costs contributed to a higher than expected operating unit costs overall.
Mick

Apparently there is no wages growth, so that must be BS.

 

[JohnDe]

S32 quarterly out shows how much inflationary pressures are affecting OZ companies.
The company had higher prices for both coal and Aluminium, which resulted in higher operating margins for those products.
This was offset by higher material prices, higher labour costs as well as scarce labour ,enegy costs as well as a number of adverse weather costs contributed to a higher than expected operating unit costs overall.
Mick

Do you have a link to that info? I couldn't find any reference to S32 claiming that inflation is their issue.

What I found out this morning is -

• The COVID-19 pandemic continues to impact our operations and supply chains in different ways, across our global portfolio. We have seen an increase in case numbers and workforce restrictions in many of the jurisdictions in which we operate, impacting labour availability. 
• Port congestion and tight global freight conditions continue to impact our supply chains, slowing the movement of inventory, most notably for our aluminium smelters in Southern Africa. While the resultant build in aluminium inventory during the December 2021 half year is expected to persist in the near term, we have and continue to establish alternative shipping solutions and points of dispatch to minimise the impact. We expect the working capital build to unwind once we realise the full benefit of our initiatives, and port congestion and general freight tightness is alleviated.

As well as releasing info that they produced less Aluminium, Silver, Lead and Coal

QUARTERLY REPORT
DECEMBER 2021

Listen to this from the 3:07 minute mark -

 

[mullokintyre]

Do you have a link to that info? I couldn't find any reference to S32 claiming that inflation is their issue.

What I found out this morning is -

• The COVID-19 pandemic continues to impact our operations and supply chains in different ways, across our global portfolio. We have seen an increase in case numbers and workforce restrictions in many of the jurisdictions in which we operate, impacting labour availability. 
• Port congestion and tight global freight conditions continue to impact our supply chains, slowing the movement of inventory, most notably for our aluminium smelters in Southern Africa. While the resultant build in aluminium inventory during the December 2021 half year is expected to persist in the near term, we have and continue to establish alternative shipping solutions and points of dispatch to minimise the impact. We expect the working capital build to unwind once we realise the full benefit of our initiatives, and port congestion and general freight tightness is alleviated.

As well as releasing info that they produced less Aluminium, Silver, Lead and Coal

QUARTERLY REPORT
DECEMBER 2021

Listen to this from the 3:07 minute mare -

The quote was from the Lincoln Indicators Stock Doctor analyst.
I am assuming that they attended a an analysts briefing, but have sent them off an email asking where they got the information from.
I will relay their response should I get one.
Mick

 

[mullokintyre]

The quote was from the Lincoln Indicators Stock Doctor analyst.
I am assuming that they attended a an analysts briefing, but have sent them off an email asking where they got the information from.
I will relay their response should I get one.
Mick

Much to my surprise, I had a call from Lincoln and there response was as follows:
If you read the text underneath each of the operations, there is a consistent staement about increases in costs.
For instance , Under Worsley Aluminia,

elevated caustic soda prices and freight rates are expected to result in Operating unit costs for the December 2021 half year being approximately 5% above our FY22 guidance (US$241/t). We expect higher caustic soda prices to persist in the June 2022 half year further impacting the refinery’s Operating unit costs.

The next entry under Brazil Alumina,

the impact of elevated raw material input prices, in combination with the already realised volume impact of the bauxite unloader outage, is expected to result in Operating unit costs for the December 2021 half year being approximately 30% higher than the June 2021 half year (US$201/t).

under the Hillside Aluminium entry

elevated raw material input costs and the smelter’s energy price linkage to the South Africa Producer Price Index are expected to result in an increase in Operating unit costs in the December 2021 half year (June 2021 half year: US$1,722/t) of approximately 10%.

The next entry is Mozal Aluminium

elevated raw material input costs are expected to result in an increase in Operating unit costs in the December 2021 half year (June 2021 half year: US$1,818/t) of approximately 10%. As you read through them,

Under the entry for Illawarra metallurgical coal

Lower December 2021 half year production and sales volumes, and higher price-linked royalties arising from the significant increase in prices year to date, are expected to result in our Operating unit costs for the December 2021 half year being approximately 20% above our FY22 guidance (US$101/t). Updated FY22 Operating unit cost guidance will be provided in our financial results announcement for the December 2021 half year.

I could go and cut and past the rest, but we get the picture.
The cost increases vary from entity to entity, so I guess they will not be able to put a company wide value on the cost increases till the EOY report.
Their costs have gone up, which is what usually happens when you get inflation.
Mick

 

[Smurf1976]

Much to my surprise, I had a call from Lincoln and there response was as follows:

"the smelter’s energy price linkage to the South Africa Producer Price Index"

That's the sort of thing I've referred to in the Inflation thread.

Where a price goes up not because of underlying factors but simply because it's directly linked to and determined by PPI or CPI.

There are many such arrangements particularly with things such as energy, water supply, wages and so on and this won't be the only company affected.

 

[qldfrog]

Much to my surprise, I had a call from Lincoln and there response was as follows:
If you read the text underneath each of the operations, there is a consistent staement about increases in costs.
For instance , Under Worsley Aluminia,

The next entry under Brazil Alumina,

under the Hillside Aluminium entry

The next entry is Mozal Aluminium

Under the entry for Illawarra metallurgical coal

I could go and cut and past the rest, but we get the picture.
The cost increases vary from entity to entity, so I guess they will not be able to put a company wide value on the cost increases till the EOY report.
Their costs have gone up, which is what usually happens when you get inflation.
Mick

I like the
higher price-linked royalties arising from the significant increase in prices year to date
Never happy ..ohh we sold higher so our royalties increases...and this was not expected?

 

[InsvestoBoy]

That's the sort of thing I've referred to in the Inflation thread.

Where a price goes up not because of underlying factors but simply because it's directly linked to and determined by PPI or CPI.

There are many such arrangements particularly with things such as energy, water supply, wages and so on and this won't be the only company affected.

Get ready for it to go in the other direction then.

YoY comparisons will be increasingly hard to beat going forward. If the level of PPI just stays as high as it is right now, in a year the YoY PPI reading will be 0%. If PPI goes down even a little bit from where it is now, expect negative YoY PPI prints. etc.

 

[divs4ever]

am looking for somewhere around $2.50 for a top-up price

i won't be holding my breath waiting for that

 

[qldfrog]

Do not take me wrong, i like s32.not right price yet but looking

 

[divs4ever]

i am probably spoiled with S32 , i got some via the BHP demerger and bought some extra later ( @ $2.63 )

but to me they still seem to be forming a long term strategy

am not rushing to buy or sell here ( currently )

 

[Sean K]

Half Yearly

Net cash almost a $billion! Huh?

Too many slides on ESG for my liking, but I suppose that's the only way to get finance these days.

Only just bought into some copper with Sierra Gorda, could do with some more of that. They are exploring for a lot of copper I suppose.

Maybe they should buy OZL to round it out a bit more.

And, take CTM for some more Nickel, thanks.

This is on my short list when there's a proper correction, but it just hasn't really happened. Perhaps in the $3 zone was a buy.

 

[finicky]

They are exploring for a lot of copper I suppose

Masses of copper in the pipeline (and silver too at their 100% Hermoza project)
For copper check out the Ambler jv with Trilogy Metals. Both Ambler deposits have copper but the Bornite deposit has 6 billion lbs so far, the major part is u/g at almost 3% copper.

Held

 

[sptrawler]

This is the problem when shares slip off your watch list, you lose track of them, tossed up and bought AWC instead a few years ago for dividend.

 

[divs4ever]

not for me,

BHP lobbed several hundred shares in my direction and i added a few extra cheap ( $2.63 )

but probably should have kept AWC as well but i thought rising energy costs would stress AWC

( i don't always make the best choice , in hindsight )