News: S32 UPDATE 1-South32 CEO Kerr says open to buying joint Anglo American manganese assets, page-23

South32 - Commodity tailwinds -> EPS and PT upgrade. We upgrade EPS by 13- 34% across FY24-26E and price target to A$4.15/sh (A$3.90/sh prior) following UBS' upward revision to silver prices, as well as recent strength in manganese and alumina prices. There remains upside if spot prices maintain, with our NPV lifting by >60% vs base case. Prices across S32's commodity basket are now a strong tailwind to earnings and FCF optionality. A restart of the buyback at August FY24 results cannot be ruled out, given expected 1H-FY25 financial close of the IMC divestment and US$1.05b upfront payment on completion, and stronger earnings. These expected developments give S32 increased optionality on funding Taylor and Sierra Gorda 4th grinding line capex perhaps without relying on as much balance sheet. After adjusting for higher commodity prices, we lift our price target to A$4.15/sh (A $3.90/sh prior) and remain Buy rated. S32's FCF yield lifts from ~0.2% FY24E to 6% FY26E, while EV/EBITDA falls from 9.6x in FY24E to 5.7x in FY26E. Source: UBS.