Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Southern Copper Corporation is an integrated copper producer. The Company produces copper and, in the production process, obtains several by-products, including molybdenum, silver, zinc, sulfuric acid, and other metals. Its segments include the Peruvian operations, the Mexican open-pit copper mines, and the Mexican underground mining operations segment identified as the IMMSA unit.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Key Metrics:

From the graph below, SCCO margins in Q2FY22 were above the industry median showing robust business performance and healthy growth. Additionally, during the past five years, the company has increased its operational efficiency with an increase in gross profit as a % of the revenue of 65.37% in FY21 compared to 51.12% in FY17, and the cost of sales as a % of revenue has also come down to 34.63% in FY21 vs. 48.80% in FY17 showing efficient management of costs and resources

1.4 Top 10 shareholders:

The top 10 shareholders together form ~91.93% of the total shareholding where a majority of them are with Grupo Mexico SAB de CV.

Grupo Mexico SAB de CV and BlackRock Institutional Trust Company, N.A. are the biggest shareholders, holding the maximum stake in the company at ~88.90% and ~0.69%, respectively.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q2FY22:

Section 3: Key Risks and Outlook

 

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 17 August 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.