FMG: Fortescue Metals Group

[Hectorplains]

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

Iron ore is a complex space to get a read on, so many political factors at play.  Then there's trying to read where it is that hydrogen may fit into this mix.

[Crackity]

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¢.

[Hectorplains]

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¢.

Forecast dividend of 175cps giving a yield of 6.14% - seems not overly elevated. 

[Crackity]

Forecast 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.☹️

[Hectorplains]

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¢.

Ore prices might be as good as it gets: predictions of less demand and more supply.  

[Hectorplains]

Ore prices might be as good as it gets: predictions of less demand and more supply.  

Or maybe it'll be hunky dory.

[Ferg]

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 $20.85
Tipranks $20.57
TradingView $20.55
WSJ $13.99

Edit: a rare positive review from an analyst: https://thebull.com.au/eight-top-asx-stocks-for-2024/

[Ferg]

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.

[Waltzing]

Any thing that isnt perfect om this one FG? anything?

[Ferg]

Any 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.

[Crackity]

Right now coal is the cash cow.

That's probably news to Twiggy - I assume you mean iron ore?

[Ferg]

That'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.

[Ferg]

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.

[kiwi2007]

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.

[Ferg]

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.