Sims’ September quarter update disclosed all assets delivered a strong operating income and the company was cash flow positive. UBS believes the end markets are improving for Sims with both ferrous and nonferrous scrap prices rising.
The first quarter volumes were on average down -15% versus last year. The broker expects the first half volumes to be down -3% or -12% versus FY19. News that China may restart ferrous scrap imports sooner than expected bodes well for the company, suggests the broker.
Buy with the target rising $12 from $10.20.
Sector: Materials.
Target price is $12.00.Current Price is $10.71. Difference: $1.29 – (brackets indicate current price is over target). If SGM meets the UBS target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
