Citi trims PT for Australia's Sims Ltd but upgrades to 'Buy' rating

Sims

17/07/2022 22:09

** Citi has cut its earnings before interest and tax
estimates by 1% for FY22 and by 6% for FY23-24 as the brokerage
lowered its Turkish scrap price assumptions by 8%
    ** The broker says the decline in Turkish scrap prices since
March 2022 has led to the cutting its EBIT forecast for co;
scrap prices till remain about $100/t lower than U.S. scrap 
    ** However, it says that Turkish scrap appears to be
oversold and is relatively cheaper than its peers; adds that
shares of SGM have fallen about 35% in the last six months 
    ** Citi says that the valuation is attractive at the current
levels which is paired with strong balance sheet and a net cash
position over FY22-24; also expects a rise in Turkish scrap
supporting co's profits and renew investor interest
    ** The broker has upgraded the stock to "Buy" from
"Neutral"; but it has cut the target price to A$17.00/shr in
order to reflect a broad market decline 
    ** Five of 11 analysts rate the stock "buy" or higher, five
"hold" and one "sell" or lower; their median PT is A$19.50 –
Refinitiv data
    ** Stock has fallen 14.1% this year, as of last close

 (Reporting by Archishma Iyer in Bengaluru; Editing by Daniel
Wallis)
 ((Archishma.Iyer@thomsonreuters.com;))