MSFT 410.37 -0.8486% AAPL 222.91 0.4144% NVDA 135.3699 0.0% GOOGL 171.29 -0.0233% GOOG 172.65 -0.3003% AMZN 197.93 -0.6119% META 567.16 -0.5297% AVGO 168.92 -0.9732% TSLA 248.98 -0.4319% TSM 192.98 -1.9261% LLY 818.79 -0.5333% V 290.73 -0.4588% JPM 222.93 -0.8539% UNH 567.53 -0.0308% NVO 111.97 -0.1684% WMT 82.19 0.4768% LVMUY 131.75 -0.6335% XOM 114.95 -1.6849% LVMHF 660.0 -0.6323% MA 508.28 -0.2316%
Company Overview: Southern Copper Corporation (NYSE: SCCO) is a major integrated copper producer with the industry's largest copper reserves. It owns and operates mining and metallurgical plants in Mexico and Peru and conducts exploration in Argentina, Chile, Ecuador, Mexico, and Peru. Grupo Mexico SAB de CV, a Mexican conglomerate, owns SCCO to 88.9%.
SCCO Details
Key Takeaways from Q1FY22 (ended March 31, 2022)
Sales & Gross Profit Key Highlights; Analysis by Kalkine Group
Dividend and Capex Updates:
Other Key Findings in Q2FY21
Balance Sheet & Liquidity Position
Key Metrics: In FY21, SCCO's operating and net margins were 55.5% and 31.1%, higher than the industry median of 20.1% and 14.1%, respectively. ROE stood at 44.2% at the end of FY21, an improvement from 22.4% for FY20. Its Debt/Equity ratio as of FY21 end was 0.80x, slightly lower than 0.91x as of FY20 end.
Profitability Metrics and Liquidity Profile; Analysis by Kalkine Group
Top 10 Shareholders: The top 10 shareholders together form around 91.70% of the total shareholding, while the top 4 constitute the maximum holding. Grupo Mexico SAB de CV and BlackRock Institutional Trust Company, N.A. hold the maximum stake in the company at 88.9% and 0.59%, respectively, as also highlighted in the chart below:
Top 10 Shareholders; Analysis by Kalkine Group
Risk Analysis
Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation (Illustrative)
Source: Analysis by Kalkine Group
*% Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.
Stock Recommendation: Over the last month, SCCO corrected 16.76%. The stock is currently trading at lower end of its 52-week range of USD 54.92 to USD 83.29. We have valued the stock using the Price/Earnings multiple-based illustrative relative valuation method and arrived at a target price with an upside of low twenties (in percentage terms). We believe that the company can trade at a premium compared to its peer's average, considering the reduction in the cash cost, stable margins, and largest copper reserves. We have taken peers like Barrick Gold Corp (NYSE: GOLD) and Newmont Corporation (NYSE: NEM). Considering the robust fundamentals, favourable average realized prices, current valuation, and associated risks, we give a "Buy" recommendation on the stock at the closing price of USD 64.93, up 3.46% as of May 04, 2022.
SCCO Technical Chart, Data Source: REFINITIV
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.
Note 3: The report publishing date is as per the Pacific Time Zone.
Technical Indicators Defined
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Kalkine Equities LLC provides general information about companies and their securities. The information contained in the reports, including any recommendations regarding the value of or transactions in any securities, does not take into account any of your investment objectives, financial situation or needs. Kalkine Equities LLC is not registered as an investment adviser in the U.S. with either the federal or state government. Before you make a decision about whether to invest in any securities, you should take into account your own objectives, financial situation and needs and seek independent financial advice. All information in our reports represents our views as at the date of publication and may change without notice.
Kalkine Media LLC, an affiliate of Kalkine Equities LLC, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.