SGM - Sims Limited

[luutzu]

I hope SGM's bleak outlook doesn't apply to BSL or S32.

I've been waiting for this one.

Haven't dive into its books yet in case I get tempted and the market pulls down my pants moment I do.

could be interesting this one.

 

[Miner]

I hope SGM's bleak outlook doesn't apply to BSL or S32.

Good point .
If I may suggest that seeing the business model of BSL and S 32 , they are not on negative side with SIM performance. In fact, SIM collects scrap from companies like BSL. IF they are not getting scrap at good value also means when BSL and alike steel makers look for scrap they would get cheaper. China demand has shrunk and hence probably demand for scraps for electrical furnaces.
S32 is altogether a different company producing aluminium, zinc, coal , manganese etc - not related to SGM's business (I think so).
Good luck

 

[tinhat]

Thanks for the heads up. It's now on the watch list.

 

[sptrawler]

$13.50 is the recent top, its enough and i just have no confidence in America being great again...winding up the super account anyway.

Winding up the super account, sounds severe. Having said that, I am certainly doing the sums, if there is no franking credits no point in risking capital.

 

[Miner]

Extracted report from Motley Fool quoting UBS today. I request the readers also to refer our one of the ASF's astute contributors SC's posting #37 of Feb 17, 2017 and Greg's commentary # 38 on yesterday as well. Basically SGM is currently not inspiring for many of us.
"Sims Metal Management Ltd (ASX: SGM)

Analysts at UBS have downgraded this scrap metal company’s shares to a sell rating from neutral and slashed the price target on them from $12.50 to $8.50 following yesterday profit downgrade. According to the note, the broker has reduced its price target after cutting its forecasts to account for the tough trading conditions Sims Metal Management is facing. And with global scrap metal markets facing increasing disruption, the broker remains cautious on the company’s prospects in the medium term."

 

[Trav.]

SGM having a nice little run over the past couple of months, one for the watchlist

 

[bigdog]

ASX announcment
16/09/2019 8:20:47 AM 1H FY20 Trading Update

Sims Metal Management Limited (the "Company") today announced that the recent and significant falls in ferrous and non-ferrous prices will negatively impact 1H FY20 and the result will be materially lower than 1H FY19.

448

 

[rederob]

Analysts at UBS have downgraded this scrap metal company’s shares to a sell rating from neutral and slashed the price target on them from $12.50 to $8.50 following yesterday profit downgrade. According to the note, the broker has reduced its price target after cutting its forecasts to account for the tough trading conditions Sims Metal Management is facing. And with global scrap metal markets facing increasing disruption, the broker remains cautious on the company’s prospects in the medium term."

Following on from today's announcement I reckon UBS made a reasonable call, albeit perhaps a bit too negative given our low interest environment and the returns that SGM will offer.
My $9.30 bid to add more SGM just over a month ago got purged, but I am in no hurry to buy again in the present environment and see under $9/share a reasonable re-entry point.

 

[So_Cynical]

Following on from today's announcement I reckon UBS made a reasonable call, albeit perhaps a bit too negative given our low interest environment and the returns that SGM will offer.
My $9.30 bid to add more SGM just over a month ago got purged, but I am in no hurry to buy again in the present environment and see under $9/share a reasonable re-entry point.

Under $9 would certainly get my attention, reasonable probability of it getting there with all the global goings on.

 

[sptrawler]

This could be of interest to those looking at SGM, it is a subscription article, but the summary gives the gist of it.

https://www.bloomberg.com/news/arti...p-imports-hit-zero-for-first-time-in-20-years

 

[So_Cynical]

This could be of interest to those looking at SGM, it is a subscription article, but the summary gives the gist of it.

https://www.bloomberg.com/news/arti...p-imports-hit-zero-for-first-time-in-20-years

No pay wall - https://outline.com/B57BtL

China’s imports of steel scrap sank to zero last month for the first time this century, a milestone for the nation that’s tipped to turn into a significant exporter in the next decade.

Well that explains it.

 

[rederob]

This could be of interest to those looking at SGM, it is a subscription article, but the summary gives the gist of it.
https://www.bloomberg.com/news/arti...p-imports-hit-zero-for-first-time-in-20-years

No pay wall - https://outline.com/B57BtL
China’s imports of steel scrap sank to zero last month for the first time this century, a milestone for the nation that’s tipped to turn into a significant exporter in the next decade.
Well that explains it.

Thanks guys.
Very interesting!
Might see what SGM report in the next 6 months before dangling any more toes in the water.

 

[rederob]

Smashed down in early trade today, with a less than reasonable outlook.
I suspect that very few will be investing in SGM until they announce a clear turnaround some time next year.
The only positive is that they did expect a poor first half, but maybe punters thought it would be better than it was.
This is not a "bad" company, but they are out of "cycle" and suffering as a result.
I have bought in and out of SGM over a very long while and will do so again when the "cycle" turns again in their favour.

 

[sptrawler]

Investors will certainly get scared with that report:
Sims Metal dramatic update
By Darren Gray


ASX-listed metals recycler Sims Metal Management will swing to a first half loss of $20 million to $30 million, the company has warned, driven by a crash in the price of scrap metal. The company forecasts a full year underlying EBIT (earnings before interest and tax) profit of $20 million to $50 million for 2019-20. This would be a 90 per cent decrease on 2018-19 underlying EBIT of $230.3 million.

Sims issued a profit warning in a statement to the ASX on Monday morning, in which it said first half trading conditions were “materially worse” than the first half of last year.

Chief executive Alistair Field said the company had unsold inventory leading into September, which was obtained at purchase prices that reflected the stronger market conditions prevalent in June-August.

“This inventory will be sold at a loss and will impact our results through to December,” he said.

Down nearly 10% as we speak, I guess the China issue is still causing problems?

 

[System]

On January 20th, 2020, Sims Metal Management Limited changed its name to Sims Limited.

 

[rederob]

A long time between drinks and SMG has now turned itself around on the back of booming metals prices.
Last week's announcement was excellent news:

"Sims Limited (“Sims or the Company”) today announced that it is expecting Underlying EBIT for full year FY21 to be between $260 million and $310 million."​

I was curious about the huge range in profit margin given only a few more months of the financial year is left. However, in the short term their market remains choppy.
Sims has a low number of shares on issue, so percentage price gains on this stock are always significant.
Could we see their 2008 record high fall in the next few years:

 

[Dona Ferentes]

Sims Ltd has beaten market expectations with results including a 74% surge in December half revenue to $4.265 billion and a near quadrupling in net profit to $253.2 million. In fact, net profit was more than $200 million higher than the net figure for the December, 2020 half alone.

This allowed Sims to more than triple its dividend from 12 cents a share for the December 2020 half to 41 cents a share.

Sims said in the release the vastly improved performance was off the back of both higher sales volumes and higher prices with its trading margin improving by 45%.

“We delivered an excellent performance in first half of 2021-22 with earnings above guidance, driven by growth in trading margin, against a backdrop of volatile freight markets and inflationary pressures,” said Sims CEO Alistair Field.

Field says intake volumes grew strongly and were close to pre-COVID levels.

“In first half 2021-22 we maintained growth momentum in the core metal business, continued to build adjacent business to further enhance our earnings quality, and strengthened our strategic position across our portfolio of businesses.”

Management said in the release that the company continues to see strong business performance in the second half, with solid volumes and prices for both ferrous and non-ferrous metals tracking higher. However, it is closely managing the impacts of freight cost volatility.

 

[rederob]

Looks like a solid year ahead for Sims:

Also, that $5/share increase over the past month was a blessing to holders.
With inflationary costs starting to build into metal prices Sims recycling margins should continue to improve in coming months.

 

[rederob]

Buy the dips:

Sadly I bought another 1k of BHP yesterday so ran out of credit.

If there is one thing a war does, it creates demand for metals. That might not be apparent from the huge recent market correction that has crucified most metal prices over the month, but the long game is to invest into emergent demand, so I reckon Sims is likely to revisit the plus $20 range well before year's end.
The other side of the Sims equation is a penchant for recycling in the developed world, and Sims has made good progress in acquiring equipment fit for purpose over recent years.

 

[IvoryWolf]

Is further weakness in SGM's share price ahead alongside the rangebound action in the materials sector? Anything is possible - find out more from an analysis of the charts within the attached video looking at an analysis of the overall market, sector analysis of the materials sector, as well as analysis of SGM: