FMG - Fortescue Ltd

[SM Junkie]

Published - Australian
04/02/2008
Page: 32
Business News

Fortescue Metals JPMorgan
Underweight recommendation
Price target of $4.50.
Last traded at $6.50.

THERE was a time when decent research on
Fortescue was very thin on the ground.
However the JPMorgan Metals & Mining
team took the bull by the horns and started
covering the stock when many others
refused to. So they should know the deal
quite well by now, despite Fortescue being a
tricky miner to analyse given that it is not
in production yet and there are real doubts
as to when it will be, despite Fortescue being
adamant that it is still on track to deliver its
first shipment by mid-May. On JPMorgan's
calculations, Fortescue shares should be
worth $4.50 each by December, based on
estimates of the company producing 100
million tonnes of iron ore a year by 2012.
Based on predictions that Fortescue's initial
ramp-up is to 55 million tonnes and
factoring in current iron ore prices
JPMorgan estimates that the shares should
be worth $2.74 apiece. Our valuation would
increase to $7.50 if we were to assume the
company reaches production of 200 million
tonnes per annum by 2012."

Worth considering?

 

[prawn_86]

Good to see 'experts' also agreeing with my view that they are way overpriced at the mo.

Although that doesnt mean you cant make money off them...

 

[doctorj]

I've always been very skeptical over the coverage of FMG. For the longest time, they simply refused to cover it and now that they are, they're doing it almost begrudgingly. They still don't believe the story and don't believe that FMG can make it happen.

As for what the valuation is, I wouldn't have the foggiest, but I do think the value for FMG is in the fact that there is finally a 3rd player in the Pilbara. When you consider the proportion of market cap the Pilbara contributes to both RIO and BHP and then you compare the relative sizes of their tenement holdings to FMG, I can't help but believe the story.

As for a former Anaconda shareholder, maybe I'm just a Twiggy tragic? Or a sucker for fairy tales.

 

[Miner]

I've always been very skeptical over the coverage of FMG. For the longest time, they simply refused to cover it and now that they are, they're doing it almost begrudgingly. They still don't believe the story and don't believe that FMG can make it happen.

As for what the valuation is, I wouldn't have the foggiest, but I do think the value for FMG is in the fact that there is finally a 3rd player in the Pilbara. When you consider the proportion of market cap the Pilbara contributes to both RIO and BHP and then you compare the relative sizes of their tenement holdings to FMG, I can't help but believe the story.

As for a former Anaconda shareholder, maybe I'm just a Twiggy tragic? Or a sucker for fairy tales.

My thoughts are FMG is seriously wooing for investor. The directors have gone again worldwide for an investor friend.
FOOS is right on May 08 even that means at an additional cost until the railway is done totally fool proof.
FMG is expected to go at $10 by June. Chance of another cyclone is now gone.
Please refer to my earlier posting on FMG where I did say that FMG will be snared by China. It matches with what I said in March 07 in the global iron conference in Perth about the high possibilities of china acquiring large chunk of share in iron producing companies in Australia. Since then MGX, CYU, RIO, are only happening. FMG is next bid.
Having said that why I did not make money - I needed couple of mini million as extra cash to invest and leave there with no page unturned at night. I did not have the courage or bank balance excepting to get my paper calculation to be right.
BTW I am not a fan of Andrew but just seeing the reality . Once bitten twice shy. Just consider that he is more clever than many of the top guns in our mining world to be where he is today. He hires hard and top notched experts who works almost 14 horus a day and he rewards them with options. The whole staff work long hours as they contribute to their options and annual bonus much better than one expects from top heavy BHPB or RIo staff.
So baby just wait and see .

 

[thedave]

Bit of a washout on opening this morning, which confirms the daytrader interest in it.

Cant help but wonder about the disbelievers myself. Billions spent on infrastructure developmen; its on time, on target; the resources estimates are massive and exceed BHP and RIO in the Pilbara, and the controlled prospective tenements are multiples of the current ground; the iron ore price will rise dramatically this year adding more value; there is no abatement in interest from China, who are looking for protective buy-in to major suppliers; the company is wide open to scrutiny, and the informed reports are favourable.

But the cyclone season is far from over, most cyclones happening in February-March in the NW. Nonetheless having lived there for many years I chuckle at the way the East Coast media over-rates cyclones. Unless they land on top of you at Cat 4 or 5, then its a day inside watching DVDs and a couple days cleaning up the trees and back to business.

 

[agro]

As a loyal FMG holder i am starting to ignore the media coverage on the company let alone the number of skeptics among the stock related forums ..

it's all but negative with Twiggy continually defying the odds

forget the overpriced nonsense prawn 86 - its making me sick,,, RIO is over $100 ? is that overpriced for an iron ore producer?

my

edit - twiggy got the infrastructure set up in 2 years , BHP took them 12 years, what does that say?

 

[prawn_86]

forget the overpriced nonsense prawn 86 - its making me sick,,, RIO is over $100 ? is that overpriced for an iron ore producer?

my

edit - twiggy got the infrastructure set up in 2 years , BHP took them 12 years, what does that say?

As i have said, its all about market cap, not the share price.

I just feel that a 17 (or however much it is now) billion dollar market cap for a company which isnt even running at a profit yet, is a bit over the top.

I have said it many times, and i have also said that there could still be money to be made, but personally i wouldn't buy into a co that is overpriced imo.

 

[thedave]

The question is will it make a profit and the answer to that is absolutely yes. This is not some tech share conjured up in mum's kitchen with one good idea behind it. FMG has huge resources, anything up to 10x what they have proven to date (and what they have proven to date is what the estimates are based on), the infrastructure investment and development is massive. Nope, no shake and bake, this is a real company with real assets and it will generate real profits, and its too big and too far down the track for the outcome to be significantly affected.

 

[agro]

why does the small bloke get it hard all the time:

http://www.theaustralian.news.com.au/story/0,25197,23177283-643,00.html

RESOURCES and Energy Minister Martin Ferguson has flagged changes to the Trade Practices Act that would protect BHP Billiton and Rio Tinto from having to allow upstart iron ore rival Fortescue Metals Group use of their rail lines in the Pilbara.

 

[agro]

Shenhua insider: Chinese firms to invest in Australian mine company


www.chinaview.cn 2008-02-08 14:14:13 Print

BEIJING, Feb. 8 (Xinhua) -- China Shenhua Energy and China Investment Corp have talked with Australia's third largest iron ore mine company to buy its stake worth 2 billion U.S. dollars, an insider with China Shenhua was quoted as saying.

The plan to buy 15.85 percent of Australia's Fortescue Metals (FMG) was still at an early stage, the anonymous source from China's largest coal producer told Shanghai-based Oriental Morning Post.

The FMG will use the capital for mine exploitation, said the source.

Harbinger Capital, FMG's second-largest shareholder, may sell its stake to China investment and Shenhua, according to an earlier report by the South China Morning Post. Fortescue founder John Andrew Forrest is the biggest owner of the company, with 35.97 percent.

The FMG is the world's fourth largest iron ore producer.

The likely bid for Fortescue came after Friday's announcement by another state-owned resources company, Chinalco (Aluminium Corporation of China Ltd.), the country's largest aluminum company, which acquired a 12-percent stake in British mining giant Rio Tinto PLC along with U.S. Alcoa Inc.

 

[enigmatic]

how do they actually call FMG the 4th largest Iron Producer in the world does that mean there is only 3 Iron producers in the world. because Im pretty sure FMG havent actual produced Iron ore yet. I think it should be, soon to become the 4th largest Iron Producer in the world.

 

[agro]

how do they actually call FMG the 4th largest Iron Producer in the world does that mean there is only 3 Iron producers in the world. because Im pretty sure FMG havent actual produced Iron ore yet. I think it should be, soon to become the 4th largest Iron Producer in the world.

i think they might be referring to scale?

Vale, BHP, RIO, FMG

nevertheless, it is good what the chinese are doing

 

[meganut]

RIO is over $100 ? is that overpriced for an iron ore producer?

RIO Is not just an Iron Ore producer, when I used to work for them they had 26 different business units under them, more now that they have acquired Ranger Uranium (who I also used to work for) and Robe River Iron.

But they have to have one of the smartest management teams I have ever had the pleasure to work for, way better than BHP's before the Billiton meger.

 

[Fed23]

What happened to this stock today to go from positive to negative (down 7.7%)? No announcements either.

 

[agro]

What happened to this stock today to go from positive to negative (down 7.7%)? No announcements either.

well considering the all ordinaries finished down, the stock needed a breather..

once more most quality iron and resource stocks were down..

 

[agro]

just for those interested, there was two presentations conducted today to investors,

one was done at the BBY Australia Resources Conference and another at the Indian Steel confrence.

Both can be found on their website:
http://www.fmgl.com.au/IRM/content/invest_asx.htm

i just found out they hold more land than BHP and RIO put together - fair dinkum

 

[Kimosabi]

how do they actually call FMG the 4th largest Iron Producer in the world does that mean there is only 3 Iron producers in the world. because Im pretty sure FMG havent actual produced Iron ore yet. I think it should be, soon to become the 4th largest Iron Producer in the world.

Twiggy did take a lump of Iron Ore with him in his suit case the last time he went to China, so maybe this qualifies FMG as a Iron Ore producer...

 

[meganut]

i just found out they hold more land than BHP and RIO put together - fair dinkum

Yep, they have about 40,000 sq/km of tenements in the pilbara! Which will hopefully put them in a good position down the track.

 

[Fed23]

It was a pretty PDF they got on their website. I'll hold my breathe until mid may when they load the first ship

 

[imaginator]

FMG - Fortesque Metal

What's happening to FMG these days?

Yesterday it went down to 6.77 I bought some at 6.79. Today its up to 7.24, then market weakness after opening forced it down to 7.07.

I'm curious what made FMG go down so much yesterday?