With the recent rally in scrap prices, amid tight supply, as the Northern Hemisphere winter kicks in, Citi believes the company’s FY20 guidance and consensus forecasts now hold upside risk.
Since the company’s profit warning in late October Turkish import scrap prices have rallied 16% and US domestic scrap prices have jumped 23%. The company expects FY20 earnings (EBIT) of $20-50m, assuming prices hold steady.
Citi retains a Buy rating and $12.10 target.
Sector: Materials.
Target price is $12.10.Current Price is $10.82. Difference: $1.28 – (brackets indicate current price is over target). If SGM meets the Citi target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
