12.03
RBC CM is downgrading Teck from Outperform to Sector Perform based on valuation. RBC CM has revised its estimates for Teck based on its commodity price changes, most notably changes to its copper and zinc price forecasts and Canadian dollar assumptions. RBC CM’ coking coal price forecast is unchanged at US$150/tonne for JFY 2010. Teck offers investors exposure to coking coal, copper and zinc in a diversified Canadian mining vehicle. RBC CM believes the shares should be considered a core holding amongst Canadian mining shares. While Teck intends to further reduce its debt over the next 12 months, the company no longer has any balance sheet or liquidity problems and further asset sales are unlikely. Over the longer term the company has assembled an interesting portfolio of projects in copper and oil sands to match its long life assets in coal and zinc. However, following the recent strong price performance the shares appear relatively fully valued compared to the peer group on near-term earnings and cash flow and RBC CM has downgraded the shares to Sector Perform.
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