- The world’s largest copper importer is China.
- China’s economy has faltered taking the strength out of global copper prices.
- Copper miners will be looking to a China economic rebound to see an improvement in their bottom line.
Sandfire Resources Limited ASX: SFR (SFR), is a mining company, primarily engaged in the business of copper ore extraction and production.
The company owns a 100% interest in Western Australian and Spanish underground copper mines, as well as some significant US interests. Based in Perth, Western Australia. SFR international’s diversification of assets and supply chain is a downsized take on large multinational mining conglomerates.
SFR has returned an average net operating margin of 16% in the last four financial years, growing revenues by 44% in that time. The mini-conglomerate approach is working well and with an added boost of a Chinese rebound, the stock is an attractive proposition.
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Sandfire Resources ASX: SFR (SFR)
SFR presents a secure financial position with a debt expansion in 2022 coinciding with asset purchases. SFR has over four consecutive years of positive free operating cash flow on the books, suggesting it is a well-managed operation.
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Question marks lay over the current value proposition of SFR stock. It is currently trading at 24.5 times earnings and there was a modest 2% dividend yield when last paid in 2022.
While the company is well run and doing the best it can with the assets and cash on hand, it is highly susceptible to the international demand for copper. Currently, the macroeconomic outlook across the globe is uncertain. China’s industrial output has stumbled in recent months and copper requires elevated activity to sustain prices that will help SFR.
TheBull.com.au stock experts believe we are about to enter a new age in the Chinese economy that will turn the corner on industrial demand for copper and subsequently SFR stock. If that happens, then $6.05 AUD as at the 14th June would turn out to be an attractive entry point for this stock.
Source: Yahoo!Finance
