S32 - Macquarie rates the stock as Outperform
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The company will not proceed with the acquisition of the Metropolitan Colliery because of the number of concessions required by the ACCC.
Macquarie suspects the concessions related to some level of sustained price discounting of the benchmark coking coal price and/or a commitment to domestic volumes, as well as maintaining the current product mix.
Meanwhile, the broker finds the farm-in deal with Trilogy interesting as it could mean the company adds copper production in the medium to longer term.
The broker suspects the US$200m allocated to the Metropolitan acquisition could be used to boost the US$500m buy-back later this year. Outperform rating retained. Target is $3.60.
Target price is $3.60.Current Price is $2.79. Difference: $0.81 - (brackets indicate current price is over target). If S32 meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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