Analyst Actions: Teck Resources Maintains Outperform Rating Based on Long-Term Growth Profile

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Teck Resources Ltd. (TCKb.TO)

OUTPERFORM

R. Profiti

CP: C$ 26.96

TP: C$ 37

CAP: C$ 15.9b

1 416 352 4563

Coking coal outlook: Stuck in surplus

Event: The Credit Suisse Global Commodities Research Team has updated its commodity price forecasts. For full details, see the full report titled "Commodities Forecasts: The Setting of the Sun..." dated April 3, 2013.

Impact: Neutral. Our Commodities Team views coking coal markets as well supplied for at least the next two years and we consequently doubt the potential for hard coking coal ( HCC ) prices to climb back above C$200/t for some time. However, HCC contract prices should offer some degree of outperformance as it represents a willingness to secure a premium product at a premium price.

Catalysts: TCK will report 1Q13 results on April 23rd. Our FY13/14/15 EPS revisions reflect recent changes to our to our coal and metals price forecasts.

Valuation: We continue to rate TCK Outperform based on its long-term growth profile in coal, copper, and undervalued energy business, as well as its relatively low jurisdictional risk profile, and strong balance sheet. TCK currently trades at P/NAV of 0.72x (vs. peer group of 0.67x) and FY13/14 EV/EBTIDA of 6.9/5.6x (vs. peer group average of 8.7/6x). Our TP of C$37 is based on a 50/50 weighting of 1x our NAVPS (C$38.81/share) and 6x FY14 EV/EBITDA.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: HCC

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