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Mid-Cap

What happened to SIMS Metal, S32, Greencross and BlueScope steel?

May 10, 2016 | Team Kalkine
What happened to SIMS Metal, S32, Greencross and BlueScope steel?

SIMS Metal Management Ltd


SGM Details
  • Steep fall: SIMS Metal Management Ltd (ASX: SGM) plunged over 10% on May 10, 2016. SGM was even removed from S&P/ASX 100 index as per S&P Dow Jones Indices’ March quarter review. Market estimates the fall partly driven by the Chinese steel prices’ reversal. The stock otherwise rallied over 32.6% in the last three months (as of May 09, 2016).
  • Recommendation: We remain bullish on the stock which is expected to gain some support from its buyback initiatives. We maintain our “Buy” recommendation on the stock at the current price of $8.45
 
South32 Ltd


S32 Details
  • Cost saving initiatives: South32 Ltd (ASX: S32) lost over 5.3% on May 10, 2016. Recently, the group delivered over US$182 million of controllable cost savings in first half of 2016 and reported to be on track to achieve US$300 million in FY16. S32 is also restructuring Worsley Alumina, South Africa Manganese while the Australia Manganese mining operations are largely finished.
  • Recommendation: We maintain our “Buy” recommendation on the stock at the current price of $1.56
Greencross Limited


GXL Details
  • Quadrant Private Equity sold their stake in GXL: Greencross Limited (ASX: GXL) plunged 6.7% on May 10, 2016 on an update that the Quadrant Private Equity sold its stake in the pet care group. However, the group is a leading player in ANZ Pet Market. GXL intends to build a portfolio of more than 350 stores and more than 350 vet clinics, and is targeting to be a leading player in the online business. The group’s addressable market in ANZ is forecasted to be over A$9 billion and is rising at ~3% per year supported by demographic and social trends.
  • Recommendation: We maintain our “Hold” recommendation on the stock at the current price of $7.09
 
BlueScope Steel Limited


BSL Details
  • North Star BlueScope steel plant incident: BlueScope Steel Limited (ASX: BSL) stock lost over 6.9% on May 10, 2016 as its North Star BlueScope steel plant had a refractory failure which washed out the molten steel from the South EAF shell, leading to an explosion and fire at the plant in Delta, Ohio in the United States. BSL expects lost production of about 35,000 tonnes, for a total pre-tax implication of $US5 million. Operational implications are still being assessed by the company.
  • Recommendation: We maintain our “Hold” recommendation on the stock at the current price of $5.90
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The information given by Kalkine Pty Ltd ABN34 154 808 312 (Australian Financial Services License Number 425376) on this website is general information or advice only.

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