Q: Hi - thoughts on where Teck’s share price goes from here? Not much of a bump with the announced sale of the coal business to Glencore, Thought we might have seen a bit more of a move up / premium on the sale. Are there any other catalysts that you can see at this time that may cause the share price to spike? Feels like things may just drift downwards/sideways for a while, especially with the cost overruns that were announced last month in other parts of their business.
5i Research Answer:
We have some comments posted now; we think it may drift in the short term, but ultimately the much stronger balance sheet should afford a higher valuation. Much will depend on what TECK does with all its new capital, of course, but we would be comfortable buying it at 9X earnings. Likely catalysts are earnings, the closing of the transaction, possible acquisitions and a China recovery.