Sims Metal's 1H17 Result Benefits From a Surge in Scrap Pricing; Shares Overvalued
We increase our fair value estimate to AUD 5.80 from AUD 5.00 per share, following the release of Sims Metal Management’s first-half 2017 result. The result was roughly 10% ahead of our estimates and a recovery in Australian and European scrap volumes (35% of group total) combined with a surge in scrap pricing to USD 290/tonne New York FOB (up 90% on the previous corresponding period, or pcp) has caused us to lift our estimates in 2017 and 2018 by 55% and 65%, respectively, albeit off very low b...Sims Metal Management buys, processes and sells ferrous and non-ferrous recycled metals and provides environmentally responsible solutions for the disposal of post-consumer electronic products, including information technology assets recycled for commercial customers. Co.'s product groups are: ferrous secondary recycling, which collects, processes and trades iron and steel secondary raw material; non-ferrous secondary recycling, which collects, processes and trades other metal alloys and residues; recycling solutions, which disposes post-consumer electronic products; and secondary processing and other services, which focuses on melting, refining and ingoting of certain non-ferrous metals.
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