Metals recycling firm Sims turned the corner last year courtesy of a strong performance from its North American division. However, we believe the “easy wins” are now behind them. Sims shares no longer trade at a material discount to NTA, which had previously protected the downside to the share price during a period of low earnings. Despite an incrementally better end-market outlook, we view the turnaround as already priced in. Although the Q1 update highlighted the progress made, it’s from a low base, and we would like to see further evidence before considering strength above $16.
- We turned cautiously bullish toward SGM last September when it was under $13; it’s now due for a rest as it approaches $16.
MM is now neutral SGM
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