The company has sold its European e-recycling asset, its most profitable asset in this division, to Remondis for EUR83.5m. This leaves the key-recycling assets in the US and Australia.
UBS understands the sale will not impact on the UK scrap yards or the company’s move to recycling cloud materials. UBS is surprised at the sale of the European asset, given the balance sheet was already strong.
The broker had expected Sims Metal would sell underperforming scrap yards given a challenging outlook for metal recycling. Sell rating and $8.05 target maintained.
Sector: Materials.
Target price is $8.05.Current Price is $11.04. Difference: ($2.99) – (brackets indicate current price is over target). If SGM meets the UBS target it will return approximately -37% (excluding dividends, fees and charges – negative figures indicate an expected loss).
