Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 12 Mar, 25 | SCCO | Buy | USD 88.86 | USD 93.0 | USD 95.5 | 5 days | 7.5% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Southern Copper Corporation engages in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile. The company is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce blister and anode copper; refining of anode copper to produce copper cathodes; production of molybdenum concentrate and sulfuric acid; production of refined silver, gold, and other materials; and mining and processing of zinc, copper, molybdenum, silver, gold, and lead. It operates the Toquepala and Cuajone open-pit mines, and a smelter and refinery in Peru; and La Caridad, an open-pit copper mine, as well as a copper ore concentrator, a SX-EW plant, a smelter, refinery, and a rod plant in Mexico. The company also operates Buenavista, an open-pit copper mine, as well as two copper concentrators and two operating SX-EW plants in Mexico. In addition, it operates five underground mines that produce zinc, lead, copper, silver, and gold; a coal mine that produces coal and coke; and a zinc refinery. The company has interests in 493,117 hectares of exploration concessions in Peru and Mexico; 239,077 hectares of exploration concessions in Argentina; 30,568 hectares of exploration concessions in Chile; and 7,299 hectares of exploration concessions in Ecuador. Southern Copper Corporation was incorporated in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation operates as a subsidiary of Americas Mining Corporation.
Significant Net Income Growth – Net income surged by 78%, reaching $794 million in 4Q24
Reduction in Cash Cost – The cash cost per pound of copper dropped by 23%, improving cost efficiency
Decline in Molybdenum and Zinc Production – Molybdenum output decreased by 5%, while zinc production dropped by 3% in 4Q24 compared to 4Q23
Increase in Operating Costs – Operating costs rose by 4%, reaching $1.477 billion, which could impact profit margins
Key investment risks for Southern Copper Corporation include fluctuating commodity prices, geopolitical tensions (such as the U.S.-China trade conflict), increasing operating costs, regulatory and environmental compliance challenges, and potential project execution delays in large-scale mining investments.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 88.86 | 82.0 | 93.0 | 95.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Production Performance and Output Variations
Southern Copper Corporation (SCCOO) reported mixed production results across different metals. Copper production increased by 2% in comparison to the fourth quarter of the previous year, while silver production surged by 155%. However, there was a decline in the output of molybdenum and zinc, which decreased by 5% and 3%, respectively. These production fluctuations reflect various operational factors, including adjustments in mining output and market demand for each metal.
Financial Performance and Profitability
The company demonstrated strong financial performance, with a 21% increase in net sales, reaching $2.784 billion in the fourth quarter of 2024. The EBITDA margin rose by 43%, while net income grew significantly by 78% compared to the same period in 2023. The cash cost per pound of copper decreased by 23%, reflecting improved operational efficiency and cost management. Despite a modest rise in operating costs, the overall profitability of SCCO showed considerable improvement.
Capital Investments and Strategic Projects
SCCO continued its commitment to long-term growth through substantial capital investments across multiple projects in Peru and Mexico. These investments include the Tía María, Michiquillay, and Los Chancas projects in Peru, as well as El Arco and El Pilar in Mexico. The expansion of smelting and mining capacities is expected to enhance the company’s production capabilities, with significant output increases projected for the coming years. The total investment in these strategic projects exceeds several billion dollars, reinforcing SCCO’s position as a leading mining corporation.
Environmental, Social, and Governance (ESG) Initiatives
SCCO remained dedicated to sustainable mining practices and corporate social responsibility. The company implemented social programs in Peru aimed at enhancing agricultural productivity and providing internet access to thousands of students. Additionally, SCCO advanced its efforts to align with the Global Industry Standard on Tailings Management, ensuring compliance with best practices in environmental management. Workplace safety initiatives also led to a 28% reduction in employee accidents, highlighting the company’s commitment to operational safety and sustainability.
Financial Stability and Debt Management
The company maintained a disciplined approach to financial management, ensuring a stable financial position. A new senior unsecured note of $1 billion was issued with a coupon rate of 5.625%, maturing in 2032. The demand for this offering exceeded expectations, reinforcing investor confidence in SCCO’s financial stability. The company’s amortization schedule reflects a well-structured debt repayment strategy, supporting continued investments in growth and sustainability.
Shareholder Returns and Dividend Policy
SCCO continued to prioritize shareholder value through consistent dividend payments. The annual dividend yield for 2024 stood at 4.6%, compared to 5.4% in the previous year. Despite fluctuations in quarterly dividend payments, the company maintained a stable distribution strategy, demonstrating its commitment to delivering returns to its investors. The financial performance and profitability improvements further supported SCCO’s ability to sustain long-term shareholder returns.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Southern Copper Corporation (NYSE: SCCO) at the closing market price of USD 88.86, as on March 11, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Basic Materials Industry: Copper
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| SCCO Southern Copper Corporation |
-0.15 0.16% | 93.31 | 23.55 | 50.25 | 6.18 | 8.31 | 6.64 | 12.17 |
| FCX Freeport-McMoran Copper & Gold Inc |
-0.202 0.53% | 37.66 | 28.12 | 19.80 | 2.61 | 3.62 | 2.77 | 7.53 |
| ANFGF Antofagasta PLC |
- -% | 25.15 | 30.01 | 21.88 | 3.61 | 2.47 | 3.54 | 6.52 |
| JIAXF Jiangxi Copper Company Limited |
- -% | 1.83 | 5.16 | 6.46 | 0.01 | 0.39 | 0.02 | 0.85 |
| LUNMF Lundin Mining Corporation |
- -% | 8.18 | 18.31 | 10.43 | 1.98 | 1.29 | 2.63 | 8.16 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
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 March 11,2025. The reference data in this report has been partly sourced from REFINITIV.
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.
Target: 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. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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