FMG - Fortescue Ltd

[agro]

looks as though it will continue to rise today as the Chinese eye of iron ore companies in light of RIO's 71% ask for the bulk commodity.

Can someone elaborate to me their thoughts because if i mention takeover speculation i will get a warning from prawn_86 for mild ramping.

thanks

 

[agro]

fancy a green stock today!

people saying news leaked out but i think its only anticipation of construction report

 

[michael_selway]

fancy a green stock today!

people saying news leaked out but i think its only anticipation of construction report

Hi just wondering, does FMG have a lot of debt?

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -2.6 -4.2 30.1 64.0
DPS 0.0 0.0 0.0 0.0

Date: 20/2/2008
Author: Kevin Andrusiak
Source: The Australian --- Page: 22
Fortescue Metals Group (FMG) remains on target to deliver the first iron orefrom its Chichester Ranges project in Western Australia by mid-May 2008. Thegroup is nearing completion of its 270km railway to Port Hedland, although ithas disclosed the cost of the project has risen by $A66m as project partnerWorleyParsons increased its estimated cost for the completed line by almost$A62m. FMG shares closed $A0.07 lower at $A7.45 on 19 February 2008

thanks

MS

 

[Miner]

Extract from Citi:
I must confess that I do not hold FMG now even if I have put my punt as FMG in stock competition.
Ironically I have seen some of the executive directors has been very friendly with Charles Aitken (Souther Equities) and Citi. Southern Equities is still a strong supporter of FMG but why Citi changed heart ?

Or are they trying to get a sell signal so that they can start buying ? Some project guys suggested that actual production could start from April even market posting is May 08.

No comments further and here goes the report as appeared in FN Arena :

FMG - FORTESCUE METALS GROUP LTD

Citi rates FMG as Initiation of coverage - Sell, High Risk - Despite being iron ore bulls, the broker has initiated coverage of this company with a Sell rating.

The broker has noted that in five short years, the company has come a long way from an iron ore hopeful to being on the cusp of production. Ramp-up to 45mt, optimisation to 55mt and expansion plans to 100+mt are very aggressive, but given the commissioning risks still to be faced, Citi considers the shares have run beyond fair value.

The target price has been set at $7 and has been derived from a 75/25 weighting of net present value and price earnings multiple.

Target price is $7.00 Current Price is $7.63 Difference$0.63) - (brackets indicate current price is over target). If FMG meets the Citi target it will return approximately - 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June. Citi forecasts a full year FY08 dividend of 0.00 cents and EPS of -3.40 cents . At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is -224.41.

Market Sentiment: -1.0

 

[snabbu]

Extract from Citi:
<snip>

No comments further and here goes the report as appeared in FN Arena :

FMG - FORTESCUE METALS GROUP LTD

Citi rates FMG as Initiation of coverage - Sell, High Risk - Despite being iron ore bulls, the broker has initiated coverage of this company with a Sell rating.

The broker has noted that in five short years, the company has come a long way from an iron ore hopeful to being on the cusp of production. Ramp-up to 45mt, optimisation to 55mt and expansion plans to 100+mt are very aggressive, but given the commissioning risks still to be faced, Citi considers the shares have run beyond fair value.

The target price has been set at $7 and has been derived from a 75/25 weighting of net present value and price earnings multiple.

Target price is $7.00 Current Price is $7.63 Difference$0.63) - (brackets indicate current price is over target). If FMG meets the Citi target it will return approximately - 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June. Citi forecasts a full year FY08 dividend of 0.00 cents and EPS of -3.40 cents . At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is -224.41.

Market Sentiment: -1.0

Macquarie is even worse
Quote:
Macquarie rates FMG as Underperform - The result doesn't mean a lot, given Fortescue hasn't sold anything yet. The broker notes management has revalued its obligations, and executed a sale-and-lease-back deal with banks on its rail & port facilities, providing cash to continue the hell-for-leather ramp up.
All this shows an aggresive attitude towards getting production up as fast as posible, and the broker thinks this is all a risk. It has also assumed higher costs and A$, offset by a higher iron ore price. Earnings fall 22% and 9% in FY09-10.

Target price is $4.10 Current Price is $7.70 Difference$3.60) - (brackets indicate current price is over target). If FMG meets the Macquarie target it will return approximately - 47% (

 

[Prospector]

In NAB Investment section the target price is $8.03 and based on 5 brokers, a Buy. So who do you believe? None of them, do your own research. They all have their own agendas.

 

[Fed23]

Finished up 8%. I should of held onto mine. I can see this going to higher as it gets closer to it's first shipment.

 

[prawn_86]

I can see this going to higher as it gets closer to it's first shipment.

I can see this going considerably lower once the market realises exactly how much they will be earning.

Unless Twiggy sells out to the Chinese...

 

[agro]

I can see this going considerably lower once the market realises exactly how much they will be earning.

Unless Twiggy sells out to the Chinese...

tell me what you just mentioned isn't considered 'down ramping' seeing though you are the moderator?

 

[prawn_86]

I was merely posting a contarian view to that of another member.

Isnt it funny how all those who are long are never normally happy to hear an opposite opinion.

EDIT - The forawrd PE of this co is huge, which is the reason why i think it will fall. A view which is backed up by some (but not all) analysts

 

[agro]

I was merely posting a contarian view to that of another member.

Isnt it funny how all those who are long are never normally happy to hear an opposite opinion.

EDIT - The forawrd PE of this co is huge, which is the reason why i think it will fall. A view which is backed up by some (but not all) analysts

yeh but why do you even bother commenting about a stock you don't hold considering you have JMS and IRL both of which are down?

you consider yourself contarian,,, do you feel irritating people by unsubstantiated posts is a good idea?

you have no basis for what you are saying.

even going by your posts if the chinese are so keen to get into FMG then i trust them before i trust the australians who never backed FMG in the first place

the chinese don't invest unless they are 101% sure of getting good returns for their money

 

[Prospector]

tell me what you just mentioned isn't considered 'down ramping' seeing though you are the moderator?

Prawn isn't a moderator agro, he just has that as part of his by-line. Nothing more than that - he hasnt been on the forum all that long and doesnt have a large number of posts. Kennas is a mod, Dr (um ???) is a mod, and of course, Joe B. Must be a couple of others too but cant think of them right now.

Doctorj - sorry about that! I did try to find the last after I posted to get your name right, but couldnt find it!

Ah, prawn 86 is a mod - that explains the confusion because I thought initially that Prawn was a mod too! Like the guy who has 'banned' as his by-line

 

[doctorj]

You can always find a list of mods at this link - https://www.aussiestockforums.com/forums/showgroups.php

It's accessible down the bottom of the forum page under the "Forum Leaders" link.

 

[prawn_86]

yeh but why do you even bother commenting about a stock you don't hold considering you have JMS and IRL both of which are down?

you consider yourself contarian,,, do you feel irritating people by unsubstantiated posts is a good idea?

you have no basis for what you are saying.

I happily admit that the shares I am holding are down, however I consider what I hold to be undervalued fundamentally, based on my own analysis. Hence I believe they will reach fair value at some stage or another.

Really, if you are happy with your investment then a contrarian view should not be irritating.

I have basis, check back a couple pages, I have already told you why I think they are overvalued. Huge forwards PE for someone yet to be cashflow positive, heavy publicity (which can be, and obviously is a good thing) but you very rarely here negatives from the co, etc.

Next time you question my post please address an issue I have raised previously rather than as a personal attack.

 

[prawn_86]

No, im saying that its status is probably still 'spec'. Officialy it is:

Business Description
Fortescue Metals Group Limited (FMG, formerly Allied Mining & Processing Limited) is a minerals exploration and development company with interests primarily in iron ore in Western Australia

So it looks as though it hasnt been upgraded to "producer" status yet. Although this should happen when the first shipment is made.

I know it has plenty of JORC, but my main 'point' is the fact that there are heaps of other companis out there, in the resource sector, with JORC'd reserves and are producing, that are still on very low PE's due to lack of market recognition. Whereas FMG is virtually increasing just because of its name.

.......Curr 2008 2009 2010
EPS -2.6 -5.1 31.2 52.9

So looking at this is it at a 2010 forward PE of 10 already. And a 2009 forward PE of approx 25.


My point is, there are current producers, on current PE's of just 2.

Just a bump of my main point for Agro if he wishes to respond

Also remember that these PE ratios would be off now as the price has risen since then.

I have also never said that you cannot make money being long, just that it is overpriced in my fundamental opinion.

 

[Frankhalo]

Citigroup and Macqaurie bank....LOL
Citigroup in the 4th quater minus $18 bil, this quater minus $15 bil, Mac Bank current SP = . When these clowns say sell I do the opposite, Mac bank had a sell 3 weeks ago when FMG was at $7, look at it now $8 plus. I'm tipping they want you to panic, sell cheaply and they come in and swoop, not the first time boys and girls, trust your research.

 

[agro]

Fortescue Wants to Sell Stake in Rail, Port Unit (Update1)

By Rebecca Keenan

March 7 (Bloomberg) -- Fortescue Metals Group Ltd., building an iron ore mine that will make it Australia's third-largest producer, wants to sell a 49 percent stake in the rail and port unit for the A$2.8 billion ($2.6 billion) Pilbara project.

``We always created The Pilbara Infrastructure Pty as a separate company because we saw that as being an entity that might be attractive to a different group of investors,'' Graeme Rowley, executive director of Perth-based Fortescue, said in an interview.

Fortescue, controlled by Andrew Forrest, Australia's richest man, is scheduled to ship its first ore to China in May after signing supply accords with mills including Baosteel Group Corp. Bringing in a joint venture partner would help fund a proposed A$10 billion expansion of the project, Rowley said.

``With the way capital costs for mining projects are going, this is another way to raise money, by flogging off the infrastructure,'' Gavin Wendt, a senior resources analyst at Fat Prophets Funds Management in Sydney, said by phone. ``It's the only way now they can raise cash without sending out alarm bells.''

Fortescue has risen more than fourfold in the past year and is the second-best performer on the Australian benchmark index. It fell 11 cents, or 1.3 percent, to A$8.17 and at the 4:10 p.m. Sydney time close on the Australian Stock Exchange.

``Invariably the people that are interested are your customers,'' Rowley said. ``We may want to hang onto the value side of the business, the iron ore, ourselves.''

The mine, in the Pilbara region in the north of Western Australia state, is targeting an initial production rate of 55 million metric tons a year and the company is looking to increase that to 200 million tons a year through the expansion, Rowley said.

Forrest is Australia's richest man with a net worth of $6.5 billion, according to Forbes magazine.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

 

[urgalzmine]

Hey guys

I am new to these forums but i have been reading what people have been saying and I agree with prawn_86 to be careful about this stock. Please keep in mind that BHP and RIO own this sector. These companies had geologists running around Australia picking the best mining sites 30 yrs ago.

For instance has anyone thought of how FMG are going to transport the materials ? Do you think BHP and RIo are going to say " yes FMG you can use our railways free of charge? "

I think this is why BHP is trying to buy RIo, to work as a synergy to block competition like FMG. If FMG get their way, goodbye RIO. I dont think RIO will sit there and do nothing.

I dunno just my

Cheers

 

[Miner]

Folks
I am not holding any FMG share or paid by Twiggy. I have been always a bit shaky about FMG. However analysing the fundamentals and project progress as released to its own working employees / contractors FMG project is at least fortnight ahead than the projected target. It will nto be 45 mtpa however. The lump circuit will make it to 45 by Sep and rememner desanding is an important part for making the 45 mpta.
Regrding the rail query - they have been behind but now all the contractors are working too hard to get it going. Rail will be ready in May. As an interim they are most likely using road transport just to prove the point.
FMG has already taken plan B for railways so even bhp case goes until 2010 it means their 200 mtpa plan will be benefitted if they win at that time.

You might have read that FMG is selling its railway and infrastructure to China. Big money and that will provide the dollars for next phase. Worley Parsons has already started recruitment for phase 2.

Resource base wise FMG has more iron ore than BHP and Rio combined.

Just another month and please see your self what happens.

Good luck

 

[Prospector]

Miner, given your past concerns about FMG, your discussions are very meaningful and encouraging. Their idea about selling infrastructure has to be more positive than going in to further debt.