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Southern Copper Corporation

Intrinsic Value Analysis (Discounted Cash Flow)Industry: Industrial MaterialsSector: Basic Materials

Fair Value Summary

Current Price$143.31
5Y Range57.87 – 89.59
5Y Selected73.73
(-) Safety Margin39.22%
5Y Buy Price$44.81
Upside (to Buy Price)-68.73%
10Y Range64.31 – 96.85
10Y Selected80.58
(-) Safety Margin39.22%
10Y Buy Price$48.97
Upside (to Buy Price)-65.82%

Company Predictability & Safety

MetricValue
Revenue R2 (5Y)0.4915
Revenue R2 (10Y)0.9096
Net Income R2 (5Y)0.3035
Net Income R2 (10Y)0.8026
EBITDA R2 (5Y)0.2230
EBITDA R2 (10Y)0.8045
FCF R2 (5Y)0.1257
FCF R2 (10Y)0.8261
Safety Score0.6078

DA 10-Year Projection

Metric2025202620272028202920302031203220332034
% Growth7.17%6.81%6.46%6.11%5.76%5.41%5.06%4.70%4.35%4.00%
Revenue12,252.6613,087.5213,933.2414,784.6015,635.9916,481.4017,314.5618,128.9418,917.8619,674.58
EBITDA7,220.277,712.248,210.618,712.309,214.019,712.2010,203.1610,683.0611,147.9611,593.88
D&A-1,097.75-1,172.55-1,248.32-1,324.60-1,400.88-1,476.62-1,551.26-1,624.23-1,694.91-1,762.70
EBIT6,122.526,539.696,962.297,387.707,813.138,235.588,651.909,058.839,453.059,831.17
Pro forma Taxes-2,520.48-2,692.22-2,866.20-3,041.33-3,216.47-3,390.38-3,561.77-3,729.29-3,891.58-4,047.24
NOPAT3,602.033,847.474,096.094,346.374,596.664,845.205,090.135,329.545,561.475,783.93
Capital Expenditures-1,437.10-1,535.02-1,634.22-1,734.07-1,833.93-1,933.09-2,030.81-2,126.33-2,218.86-2,307.62
NWC Investment-93.88-95.67-96.91-97.56-97.56-96.88-95.47-93.32-90.40-86.71
(+) D&A1,097.751,172.551,248.321,324.601,400.881,476.621,551.261,624.231,694.911,762.70
Free Cash Flow3,168.803,389.333,613.283,839.344,066.054,291.854,515.114,734.124,947.125,152.31
Diluted Shares Outstanding802,650,000.00802,650,000.00802,650,000.00802,650,000.00802,650,000.00802,650,000.00802,650,000.00802,650,000.00802,650,000.00802,650,000.00

Discounting Periods

MetricDec-25Dec-26Dec-27Dec-28Dec-29Dec-30Dec-31Dec-32Dec-33Dec-34
Period Start9/30/251/1/261/1/271/1/281/1/291/1/301/1/311/1/321/1/331/1/34
Period End12/31/2512/31/2612/31/2712/31/2812/31/2912/31/3012/31/3112/31/3212/31/3312/31/34
Mid-Point11/15/257/2/267/2/277/1/287/2/297/2/307/2/317/1/327/2/337/2/34
Time (t)0.100.461.462.463.464.465.466.467.468.46
Valuation Date1/16/26

Base Case Projected Flows

WACC: 9.10%Terminal Growth: 2.45%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.880.810.740.680.620.570.520.48
PV UFCF3,141.333,256.253,181.923,099.043,008.342,910.602,806.652,697.382,583.682,466.45
Raw: 62,708.64
44,419.42
Raw: 79,461.48
36,418.18

Base Case Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value60,106.3065,569.82
(-) Net Debt3,797.053,797.05
Equity Value56,309.2561,772.77
(/) Shares Out802.65802.65
Fair Value$70.15$76.96
(-) Safety Margin39.22%39.22%
Buy Price$42.64$46.78
Current Price$143.31$143.31
Upside (to Buy Price)-70.25%-67.36%

Conservative Projected Flows

WACC: 10.10%Terminal Growth: 1.95%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.870.790.720.650.590.540.490.44
PV UFCF3,138.473,242.613,139.813,030.252,914.852,794.532,670.262,542.992,413.672,283.22
Raw: 50,907.88
34,780.71
Raw: 64,508.10
27,243.98

Conservative Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value50,246.7055,414.63
(-) Net Debt3,797.053,797.05
Equity Value46,449.6551,617.58
(/) Shares Out802.65802.65
Fair Value$57.87$64.31
(-) Safety Margin39.22%39.22%
Buy Price$35.17$39.09
Current Price$143.31$143.31
Upside (to Buy Price)-75.46%-72.72%

Aggressive Projected Flows

WACC: 8.10%Terminal Growth: 2.95%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.890.830.760.710.650.600.560.52
PV UFCF3,144.223,270.073,224.993,170.043,105.733,032.622,951.372,862.712,767.402,666.27
Raw: 81,392.73
59,795.39
Raw: 103,137.09
51,334.42

Aggressive Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value75,710.4481,529.85
(-) Net Debt3,797.053,797.05
Equity Value71,913.3977,732.80
(/) Shares Out802.65802.65
Fair Value$89.59$96.85
(-) Safety Margin39.22%39.22%
Buy Price$54.46$58.86
Current Price$143.31$143.31
Upside (to Buy Price)-62.00%-58.93%

Reverse DCF: Market Implied Growth

Current Price$143.31
WACC Used9.1%
IMPLIED REVENUE GROWTH160.46%
Metric2027202820292030203120322033203420352036
Implied Revenue32,126.6183,677.44217,947.45567,669.031,478,558.863,851,075.4810,030,566.1026,125,755.4968,047,515.24177,237,528.41
Constant Implied Growth160.46%160.46%160.46%160.46%160.46%160.46%160.46%160.46%160.46%160.46%
Implied Free Cash Flow3.218.3721.7956.77147.86385.111,003.062,612.586,804.7517,723.75
Discount Factor0.930.810.740.680.620.570.520.480.440.40
Present Value of Implied FCF2.996.7516.1338.5091.91219.42523.861,250.662,985.837,128.40

Rolling Historical DCF (Backtest)

Valuation based on actual realized growth.
YearValuation DateActual PriceRealized Growth (5Y)Calculated Fair ValueValuation Delta
20192019-12-31$40.445.69%$22.19-45.13%
20182018-12-31$29.298.10%$24.14-17.57%
20172017-12-31$45.1711.01%$23.30-48.41%
20162016-12-31$30.4011.11%$-13.10-143.09%
20152015-12-31$24.868.82%$-14.61-158.77%
20142014-12-31$26.8410.68%$-9.58-135.70%
20132013-12-31$27.338.50%$1.21-95.57%
20122012-12-31$36.043.91%$17.86-50.45%
20112011-12-31$28.42-3.52%$19.18-32.50%
20102010-12-31$45.90-5.74%$19.47-57.59%
20092009-12-31$31.001.85%$9.82-68.31%
20082008-12-31$15.1312.44%$33.98124.62%
20072007-12-31$33.0013.36%$70.88114.80%
20062006-12-31$16.924.08%$31.7487.59%
20052005-12-31$10.51-4.91%$15.5247.64%
20042004-12-31$7.41-2.31%$7.420.08%
20032003-12-31$7.4013.00%$7.491.25%
20022002-12-31$2.2634.10%$7.44229.38%
20012001-12-31$1.8840.22%$5.15174.14%
20002000-12-31$2.0233.76%$5.73183.48%
19991999-12-31$2.4219.17%$-11.47-574.06%
19981998-12-31$1.485.52%$-3.17-314.47%
19971997-12-31$2.102.27%$2.9540.52%
19961996-12-31$2.30-3.00%$1.16-49.36%
19951995-12-31$2.53-4.37%$0.00-100.00%

Monte Carlo Simulation (1,000 Iterations)

Mean Fair Value
$79.44
Median
$77.04
10th Percentile
$64.61
90th Percentile
$96.97

Fair Value Distribution

$54.78 - $64.15
87
$64.15 - $73.53
288
$73.53 - $82.91
299
$82.91 - $92.28
175
$92.28 - $101.66
83
$101.66 - $111.04
38
$111.04 - $120.41
18
$120.41 - $129.79
9
$129.79 - $139.17
1
$139.17 - $148.55
0
$148.55 - $157.92
0
$157.92 - $167.30
1
$167.30 - $176.68
0
$176.68 - $186.05
0
$186.05 - $195.43
0
$195.43 - $204.81
0
$204.81 - $214.19
0
$214.19 - $223.56
0
$223.56 - $232.94
0
$232.94 - $242.32
1