Soul Patts (ASX:SOL) share price hits record high amid copper spin-off rumours

A rumored spin-off of a metals subsidiary has sent Sol Patts to a new all-time high.

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The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price hit a new all-time high today. The record comes after the Australian Financial Review (AFR) reported the company was considering spinning off its copper-based subsidiary onto the ASX.

At the time of writing, shares in the investment house are down 1.05% trading at $37.83 after hitting an intraday and all-time high of $38.84.

Today’s milestone for the Soul Patts share price comes amid a disappointing day on the market overall. The S&P/ASX 200 Index (ASX: XJO) is currently down a mammoth 1.97%.

Let’s take a closer look at the news.

Soul Patts copper spin-off

According to the AFR report, which came after markets closed yesterday, Soul Patts is “advancing plans” for an initial public offering (IPO) of its wholly-owned subsidiary Round Oak Metals.

Round Oak is a predominately copper focused company with operating mines in Queensland and Western Australia, as well as non-operating growth projects in Victoria and Queensland.

Apparently, Soul Patts is planning to hold onto a large number of shares in the company, just like it does in Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC).

This comes amid a surging copper price – up 20.4% in 2021 so far. As of writing, the red metal is trading for US $4.24 per pound on the open market.

The website Trading Economics says constrained supply and increasing demand has seen the price of copper rise in recent months. One reason for rising copper demand is surging production in green technology. Copper is essential in the manufacture of such products.

In its half-year results, Soul Patts reported that Round Oak contributed about $12.8 million to the group’s profits. In the prior corresponding period (pcp), the business lost $37.3 million.

The company advised that revenue was up 95% to $145.9 million, largely driven by higher sales volumes, strengthened commodity prices and improved zinc smelter treatment changes. The AFR says the company should make around $64 million for the full-year.

Soul Patts share price snapshot

Over the past 12 months, the Soul Patts share price has increased an astonishing 81.7%. That’s 56 percentage points greater than the ASX 200. Year-to-date, Soul Patts’ value has appreciated 25.1% – 15 percentage points better than the benchmark index.

Washington Soul Pattinson has a market capitalisation of approximately $9.2 billion.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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