South32 delivered an FY20 result that outpaced the consensus and was in line with UBS.
The on-market buyback is still suspended as the company manages its cash, the remaining US$121m postponed to September 21, when conditions will hopefully improve. Net cash at June 30 was US$298m ahead of consensus and the broker.
The miner is instead investing in the advancement of project milestones and awaiting the US$739m closure and rehab liability for South Africa Energy Coal, which UBS expects will give South32 a chance to revisit the balance sheet.
Target price rises to $2.80 from $2.60. Buy rating retained.
Sector: Materials.
Target price is $2.80.Current Price is $2.14. Difference: $0.66 – (brackets indicate current price is over target). If S32 meets the UBS target it will return approximately 24% (excluding dividends, fees and charges – negative figures indicate an expected loss).
