FMG are primarily* an end to end iron ore miner in Western Australia. They recently announced their FY22 results. It was their 2nd best result ever behind the FY21 results, but that should be viewed in the context of the windfall iron ore price gains in FY21 of circa US$6b.
Website here: https://www.fmgl.com.au/investors
Trailing earnings of A$2.77/share divided into today's ex dividend SP of $16.41 gives a trailing P/E ratio of just under 6. Dividends for the past 2 half years total A$2.07 nett (or $2.96 gross for those who can use franking credits) for a trailing dividend yield of ~12% nett (or 18% gross).
This is a cash machine with reported gross interest bearing debts of US$5.3b (excl. lease liabilities) and cash of US$5.2b.
*I say "primarily" an iron ore miner but they own the entire value chain from exploration, through extraction, processing, rail transportation, sales and shipping into China.
They are also investing into green energy via FFI Fortescue Future Industries which is building capacity for green hydrogen production, as well as ammonia powered engines and green ammonia fuel production. There is some chatter on HC this arm of the business may end up larger than FMG in years to come - I won't hold my breath!
Caveat: earnings are highly susceptible to the international iron ore price and the AUD/USD cross rate. FMG had C1 costs of US$15.91/wet metric tonne (wmt) in FY22 which are forecast to rise to US$18-$18.75/wmt in FY23. Without a corresponding increase in the average price of iron ore sales in FY23, we will see EBITDA reduce until some of the capital projects currently underway start to deliver.
The market is likely applying a hefty discount to forward earnings. As they say...time will tell.
https://nz.finance.yahoo.com/quote/FMG.AX/chart?p=FMG.AX
I likey
That last downturn had me back in, and this recent one might be a good point to pick up some more.
Fortescue recently held an investor presentation. The transcript of that can be found here:
https://www.fmgl.com.au/docs/default-source/announcements/decarbonisation-strategy-event-transcript.pdf
There is quite a bit of chatter in there about their green arm, Fortescue Future Industries (aka FFI) and upcoming gross* capex of $6.2b which will generate savings of $818m p.a.
*I say "gross" capex given that is the total spend but Dr Andrew Fortescue is adamant the first $3b will be self-funded.
I believe this is the release they refer to in the conference call:
https://www.fmgl.com.au/docs/default-source/announcements/fortescue-announces-execution-plan-for-industry-leading-decarbonisation.pdf
They believe it will save cash and the planet. Time will tell....
Hopefully fellow investors picked up a few more at recent low prices.
https://nz.finance.yahoo.com/quote/FMG.AX?p=FMG.AX
FMG are currently exempt from the FIF tax regime.
Not a bad result from FMG. Nice final dividend of A$1. Have to get to page 30 to see this is the 3rd best ever profit*
https://hotcopper.com.au/documentembed?id=uOMxKKzFkiWRTLKhOROKAxjvTDYL4gi4wBf0v%2FF0%2BLFiGug%3D
*IOW it's not as good as last year, or the year before that.
How is China steel construction looking?
Disclosure: hold and accumulating on price weaknesses
Most recent quarterly production report can be seen here:
https://cdn.fortescue.com/docs/default-source/announcements-and-reports/2630041.pdf?sfvrsn=2ce2c380_6
No red flags. BAU.
In addition to production at the new Ironbridge facility ramping up, there is a massive project coming online in Gabon. The first shipment will be later this year which is <6 months from pushing "go" which will be an incredible achievement. There have been political tensions recently, but apparently FMG are all good with political developments there. Dino Otranto, Mining CEO, talks about Gabon and other things here: https://www.abc.net.au/news/programs/the-business/2023-10-31/fortescue-optimistic-on-china-future-despite/103046754
What is also interesting are the green projects under the new banner Fortescue Energy (previously Fortescue Future Industries). A lot can be seen here in the analysts transcript:
https://cdn.fortescue.com/docs/default-source/announcements-and-reports/231026_investor-and-analyst-call-transcript_sep23.pdf?sfvrsn=adcc466d_1
In particular, they want to own the value chain (or enter JVs) that will get FMG to true zero emissions by 2030. They are doing it in a way that has saleable solutions for others in the mining industry. There is a LOT to unpack but the main points I can see are:
- They have set up an innovation centre in the UK focusing on technical development, testing & prototype production of batteries and zero emission powertrains
- Next year FMG will set up a manufacturing facility in the UK to expand heavy duty battery and electric powertrain production for mining trucks and trains
- They have advanced their production capability and R&D on their own hydrogen electrolyser stacks and are manufacturing their own stacks. They are also developing their own technology to limit supply chain risks
- In addition to procuring diesel electric trucks they are working in parallel on a green hydrogen fuel cell haul truck, and expect to launch that soon
- They have commissioned the production of the world's first ever ship powered by green ammonia, after completing a proof of concept
- Last week they did their first ever banking run with an ammonia powered locomotive where they pushed a loaded train uphill for 100km using a 40/60 ammonia/diesel split.
- They acquired Phoenix Hydrogen Hub in the USA, where they will develop an 80MW electrolyser and liquefaction facility
- Construction of a 100MW solar farm at North Star Junction
All of these green initiatives are being funded by current opex and capex budgets while remaining cash flow positive. There are a lot of moving parts which is hard to get one's head around. FMG appear to have employed some very smart people to not only save the planet, but to also provide nice returns to shareholders. Keep up the good work!
A story in the AFR caught our attention overnight, with Citi now tipping iron ore to hit $US130 by the end of 2023, not a huge call with the bulk commodity up more than +20% over recent months. They cited further stimulus out of China as the likely catalyst for the move, we agree with them but believe they are a bit late to the party and are still too conservative – importantly, the large-cap iron names are likely to be rerated higher as most analysts are using much lower prices in their valuation models, e.g. UBS is still using a long-term iron ore price to US $85/t, although we note this a long term projection a move towards $US150 on China stimulus might cause a rethink.
We continue to target the $US150 area for iron ore, significantly above consensus analyst expectations.
MM remains bullish on Iron Ore into 2024
Market Matters this AM - $150 a chunky call 🤔
Would be great for FMG and MIN
A chunky call indeed.
Singapore 62% iron ore chart is here:
https://www.barchart.com/futures/quotes/C0*0
And FMG is within spitting distance of their all time high in July 2021:
https://nz.finance.yahoo.com/quote/FMG.AX?p=FMG.AX
The 2021 SP peak coincided with the peak in Singapore iron ore prices.
And in other news FMG have approval from local Government to connect their green hydrogen & green ammonia project to the electricity grid in Brisbane:
https://www.powerlink.com.au/news-media/agreement-seals-future-hydrogen-queensland
This will enable them to produce 70k tonnes of hydrogen and 400k tonnes of ammonia p.a.:
https://fortescue.com/what-we-do/our-projects/gibson-island
Others are now making the call for $150/tonne:
https://www.mining.com/web/iron-ore-price-poised-to-hit-150-in-2024-on-chinese-stimulus-analysts-say/
Quote from: Ferg on Nov 30, 2023, 07:35 PMOthers are now making the call for $150/tonne:
https://www.mining.com/web/iron-ore-price-poised-to-hit-150-in-2024-on-chinese-stimulus-analysts-say/
$150ish starts making things like Fenix look real good too 🤔
Quote from: Crackity on Nov 30, 2023, 08:14 PM$150ish starts making things like Fenix look real good too
Do you know much about Fenix? A quick search on HC shows lots of optimism....but my guess is with much lower volumes than FMG their breakeven will be a lot higher....so a considerably smaller & riskier version of FMG perhaps? Or am I missing something?
Quote from: Ferg on Nov 30, 2023, 10:38 PMDo you know much about Fenix? A quick search on HC shows lots of optimism....but my guess is with much lower volumes than FMG their breakeven will be a lot higher....so a considerably smaller & riskier version of FMG perhaps? Or am I missing something?
I'd compare them more to MinRes with their mining services and iron ore strategy. They have only been listed a few years and have over the last year expanded their high grade iron ore reserves and also diversified into logistics ( rail sidings and road trains ) and port holdings ( berths and space at Geraldton). I'm keeping an eye on them as I think it is a good strategy but they are a higher cost iron ore producer so results very sensitive to price....
I also keep an eye on GRR.
No position in either company at the mo......
Quote from: Crackity on Dec 09, 2023, 09:57 AMI'd compare them more to MinRes with their mining services and iron ore strategy. They have only been listed a few years and have over the last year expanded their high grade iron ore reserves and also diversified into logistics ( rail sidings and road trains ) and port holdings ( berths and space at Geraldton). I'm keeping an eye on them as I think it is a good strategy but they are a higher cost iron ore producer so results very sensitive to price....
I also keep an eye on GRR.
No position in either company at the mo......
I have two small, IO speccy stakes:
MGX Mt Gibson Iron in Western Australia have been in production since 2004. The Koolan Island Mine has good purity and a 65.3% average iron ore grade. They have been disrupted by a fire at their processing plant last year, repairs are now completed so sales volumes should ramp up from here. They also have the Shine Iron Ore Project sitting out north of Perth. That's been in care and maintenance for two years. The last drop in iron ore prices made it unprofitable. I'm picking that prices stabilizing at current levels will see it re-opening. MGX still have their storage facilities at Geraldton port. Their share price has not yet reacted to the surge in IO prices.
HIO Hawsons are set to mine near Broken Hill. HIO's goal is to produce some of
the world's highest-grade iron ore concentrate, which reduces the carbon created in steel manufacturing. Their grades are 70+ and low in impurities. Green iron ore attracts a premium price and a global shortage is predicted in the years ahead.
HIO's mine will produce 20 million tonnes of iron ore annually over its 20 year mine life. HIO's project plans were delayed last October they sited increasing costs and deteriorating economic conditions as the reason. They dragged out $9m from holders and institutions in March which will keep the lights on. They need a JV partner to get digging, any news of that should kick their SP back up the hill.
Last IO price run, I lost a good deal of my dough on VMS (Venture) and their pig iron pipe dreams.
Quote from: Hectorplains on Dec 10, 2023, 08:24 AMI have two small, IO speccy stakes:
MGX Mt Gibson Iron in Western Australia have been in production since 2004. The Koolan Island Mine has good purity and a 65.3% average iron ore grade. They have been disrupted by a fire at their processing plant last year, repairs are now completed so sales volumes should ramp up from here. They also have the Shine Iron Ore Project sitting out north of Perth. That's been in care and maintenance for two years. The last drop in iron ore prices made it unprofitable. I'm picking that prices stabilizing at current levels will see it re-opening. MGX still have their storage facilities at Geraldton port. Their share price has not yet reacted to the surge in IO prices.
HIO Hawsons are set to mine near Broken Hill. HIO's goal is to produce some of
the world's highest-grade iron ore concentrate, which reduces the carbon created in steel manufacturing. Their grades are 70+ and low in impurities. Green iron ore attracts a premium price and a global shortage is predicted in the years ahead.
HIO's mine will produce 20 million tonnes of iron ore annually over its 20 year mine life. HIO's project plans were delayed last October they sited increasing costs and deteriorating economic conditions as the reason. They dragged out $9m from holders and institutions in March which will keep the lights on. They need a JV partner to get digging, any news of that should kick their SP back up the hill.
Last IO price run, I lost a good deal of my dough on VMS (Venture) and their pig iron pipe dreams.
You now have an indirect interest in Fenix HP 😎
Iron ore producer Fenix Resources (ASX:FEX) has completed the acquisition of Mount Gibson's (ASX:MGX) Mid-West iron ore and port assets in Western Australia.
Fenix, which has a $196.59 million market capitalisation, has acquired the Shine Iron Ore Mine, 2 on-wharf bulk material storage sheds at Geraldton Port, 2 rail sidings at Ruvidini and Perenjori, and mining assets and obligations at the Extension Hill Iron Ore Mine.
Fenix reports the transaction consideration has been transferred to Mount Gibson, comprising $10 million in cash and 60 million fully paid ordinary FEX shares, alongside 25 million options.
Following the completion of the transaction, Mount Gibson holds about 8.6% of Fenix's issued ordinary shares.
Quote from: Crackity on Dec 10, 2023, 01:16 PMYou now have an indirect interest in Fenix HP 😎
Iron ore producer Fenix Resources (ASX:FEX) has completed the acquisition of Mount Gibson's (ASX:MGX) Mid-West iron ore and port assets in Western Australia.
Fenix, which has a $196.59 million market capitalisation, has acquired the Shine Iron Ore Mine, 2 on-wharf bulk material storage sheds at Geraldton Port, 2 rail sidings at Ruvidini and Perenjori, and mining assets and obligations at the Extension Hill Iron Ore Mine.
Fenix reports the transaction consideration has been transferred to Mount Gibson, comprising $10 million in cash and 60 million fully paid ordinary FEX shares, alongside 25 million options.
Following the completion of the transaction, Mount Gibson holds about 8.6% of Fenix's issued ordinary shares.
Heck-orooni, thanks Crackity. I need to be paying more attention!
Another "go you good thing" where we have pushed past the high from July 2021. HC chatter suggests this is not just related to the Iron Ore price but also the green energy initiatives.
https://nz.finance.yahoo.com/quote/FMG.AX?p=FMG.AX&.tsrc=fin-srch
Quote from: Ferg on Dec 11, 2023, 11:30 PMAnother "go you good thing" where we have pushed past the high from July 2021. HC chatter suggests this is not just related to the Iron Ore price but also the green energy initiatives.
https://nz.finance.yahoo.com/quote/FMG.AX?p=FMG.AX&.tsrc=fin-srch
Iron ore is a complex space to get a read on, so many political factors at play (https://oilprice.com/Metals/Commodities/Australias-Iron-Ore-Exports-Face-Uncertain-Future.html). Then there's trying to read where it is that hydrogen may fit into this mix.
A surge in the iron ore price to $US140 ($205) a tonne, its highest level in 1½ years, pushed the Australian dollar to a fresh five-month high and puts Treasurer Jim Chalmers' 2023-24 federal budget on course for a bigger than expected surplus.
Iron ore futures traded in Singapore rose to $US140.45 a tonne on Wednesday for the January contract, sending the currency to US68.26¢.
Quote from: Crackity on Dec 27, 2023, 08:30 PMA surge in the iron ore price to $US140 ($205) a tonne, its highest level in 1½ years, pushed the Australian dollar to a fresh five-month high and puts Treasurer Jim Chalmers' 2023-24 federal budget on course for a bigger than expected surplus.
Iron ore futures traded in Singapore rose to $US140.45 a tonne on Wednesday for the January contract, sending the currency to US68.26¢.
Forecast dividend of 175cps giving a yield of 6.14% - seems not overly elevated.
Quote from: Hectorplains on Dec 27, 2023, 09:42 PMForecast dividend of 175cps giving a yield of 6.14% - seems not overly elevated.
Yeah - buy dirty coal things like WHC or NHC for supercharged yields🤭
However our tax system not as kind to us as to the sandpaper cricketers with the dividends.☹️
Quote from: Crackity on Dec 27, 2023, 08:30 PMA surge in the iron ore price to $US140 ($205) a tonne, its highest level in 1½ years, pushed the Australian dollar to a fresh five-month high and puts Treasurer Jim Chalmers' 2023-24 federal budget on course for a bigger than expected surplus.
Iron ore futures traded in Singapore rose to $US140.45 a tonne on Wednesday for the January contract, sending the currency to US68.26¢.
Ore prices might be as good as it gets: predictions of less demand and more supply. (https://www.heraldsun.com.au/business/stockhead/bulk-buys-iron-ore-was-the-surprise-packet-of-2023-will-it-continue-to-shock-in-2024/news-story/a2d490bf3e33a70c577ab82322f76c21)
Quote from: Hectorplains on Jan 02, 2024, 07:22 PMOre prices might be as good as it gets: predictions of less demand and more supply. (https://www.heraldsun.com.au/business/stockhead/bulk-buys-iron-ore-was-the-surprise-packet-of-2023-will-it-continue-to-shock-in-2024/news-story/a2d490bf3e33a70c577ab82322f76c21)
Or maybe it'll be hunky dory. (https://www.ft.com/content/3d8a489e-3409-4748-a41a-46083a3051e0)
One thing I have learned with FMG is to ignore the analysts. They were calling for a $16 SP most of 2023. It never happened; in fact the reverse did as we saw new all time highs. I would like it to drop back to $16 because then I would buy even more; I am not a buyer at these prices.
Today's close at $29.39 is within cents of the ATH in December 2023.
TPs:
Fintel (https://www.nasdaq.com/articles/fortescue-metals-group-asx:fmg-price-target-increased-by-6.16-to-20.85) $20.85
Tipranks (https://www.tipranks.com/stocks/au:fmg/forecast)$20.57
TradingView (https://www.tradingview.com/symbols/ASX-FMG/forecast/) $20.55
WSJ (https://www.wsj.com/market-data/quotes/AU/FMG/research-ratings) $13.99
Edit: a rare positive review from an analyst: https://thebull.com.au/eight-top-asx-stocks-for-2024/
A good H1 result from FMG announced today:
https://fortescue.com/investors#anchor-3
Topline revenue up 21% YoY to US$9.5b
NPAT up 41% to US$3.3b
FCF up 68% to US$2.6b
EPS for H1 A$1.66 (LY A$1.15)
Interim Dividend A$1.08 (LY A$0.75)
High iron prices contributed significantly to this result.
Term liabilities (excl. leases) of US$4.6b versus cash & equivalents of US$4.7b.
No red flags.
Any thing that isnt perfect om this one FG? anything?
Quote from: Waltzing on May 10, 2024, 07:00 PMAny thing that isnt perfect om this one FG? anything?
Haha - plenty that is not perfect Waltzing but I'm enjoying holding this one for now.
Things to watch out for include a collapse in coal prices which will be correlated with steel production in China. Also, IMO the business is built around the personality and vision that is Andrew Fortescue...he has plenty of haters but appears to be trying to lead the industry in getting to zero emissions. No personal medical issues please! There is also a court case around damage to historic sacred sites in the Pilbara region in Western Australia.
Right now coal is the cash cow. Analysts are struggling to value all the Energy bits given there are so many moving parts and currently there are not a lot of (or no) visible runs on the board. Some projects may (will?) end up as white elephants.
I'm not a buyer at these prices.
Quote from: Ferg on May 10, 2024, 10:06 PMRight now coal is the cash cow.
That's probably news to Twiggy - I assume you mean iron ore?
Quote from: Crackity on May 11, 2024, 12:10 AMThat's probably news to Twiggy - I assume you mean iron ore?
Haha - nice catch. I mentioned coal twice!!! Oh dear - I must have had coal on the brain. Yes iron ore all the way.
Some info on the green initiatives at FMG complete with rousing music. Note FMG also have an eye out for shareholders and not just the environment:
Some impressive stats in that video.
One broker is a BUY and one a SELL today
https://thebull.com.au/18-share-tips/12-august-2024/
Whilst MorningStar had it as a HOLD last week but with a valuation of $16.20
Maybe the price is about right? Nice yield anyway.
Brokers have always been down on FMG for some reason and yet it performs.
I don't know what the charts are saying but I sold out over the last 2 weeks.
I was not happy with the revolving door of senior executives, nor the flip flop on some of their FFI initiatives (although cutting headcount is good for the financials) and some of the weird announcements by Twiggy. IMO something is not right at head office and whether this is down to Twiggy or not remains to be seen. I am seeing red flags. I'm sure they will continue to be profitable off the back of iron ore sales and they clearly have some smart people. But I see a higher risk with FMG than I originally assessed and for that reason I am out.