FMG - Fortescue Ltd

[joeno]

My last word on the matter in this thread as its getting OT. All businesses try to win hearts and minds by doing those sort of things, its PR. Here though, he knew which side his bread was buttered on. He aided and participated in CCP propaganda for his own financial interest. Those who do that are aiding the CCP to enslave, torture and murder more people. He said, "stuff everyone else, I'm looking out for number 1, no matter what". Business is business, but don't go jumping into bed with them (the CCP), at least have an arms length relationship.

Wow big fighting words. So what are you doing to solve hunger, poverty, gang violence, environmental challenges in Australia? The problems here in this country are more important than problems in China / other countries surely. Or is this another "sponsored by the US Embassy" moment

I'd suggest you urgently sell shares of FMG at discount to people like me. And you can buy companies that refuse to do business with China. Pretty simple solution.

 

[tinhat]

I don't play iron ore except for a small holding in MIN (talking of old stickman). I hope everyone is out now or has at least taken profit. BTW, copper has broken out.

 

[basilio]

Have to say I'm very impressed with the recovery of Fortescue in the last 10 years.
VC critical ongoing analysis of the companies operations and likely outcome have earned him a rightful packet.

It looks as if it still has a strong future.

 

[systematic]

I hope everyone is out now or has at least taken profit.

Hang on, what? Why out? Hoping to hold to one year mark at least (August). No profit taken. What have I missed?

 

[over9k]

Nothing. Brazil's been obliterated and china targets employment whether there's a market for the goods or not so it keeps making steel even when there isn't a market for it. They're at the point of even filling their (now empty) sports stadiums with it.

Hold.

 

[dat111]

Your welcome everyone. I have been a buyer of FMG since 2004 and sold 5,000 of my ~20,000 shares end of December 2018 to take a loss...


Been hoping for the price to run up and it finally has in spades. Regarding what the future will bring...who knows....but those of us who have been in for 15 plus years it has been a roller coaster. The cost basis for what I have left is about $2.58/share... the dividend is about $0.92/year... The debt is all but gone... The drivers to force a sale or bankruptcy are not the same as in the past... So I will continue to take my 35% yield...

 

[basilio]

How challenging was it for Twiggy to build his mine ?
I found an online biography of Twiggy which is a good read.

TO GET RICH IS GLORIOUS
You will look back and know you were part of history, like building the Sydney Harbour Bridge.

—ANDREW FORREST

https://erenow.net/biographies/twiggy-high-stakes-life-of-andrew-forrest/10.php

 

[Dona Ferentes]

How challenging was it for Twiggy to build his mine ?
I found an online biography of Twiggy which is a good read.

TO GET RICH IS GLORIOUS
You will look back and know you were part of history, like building the Sydney Harbour Bridge.

—ANDREW FORREST

all he's doing is digging stuff out of the ground. He was lucky his open cut coal mining techniques worked on surface iron ore. And what a China suck.

 

[basilio]

all he's doing is digging stuff out of the ground. He was lucky his open cut coal mining techniques worked on surface iron ore. And what a China suck.

Did you read the extract Dona? Interestingly enough the really BIG challenge was pulling together the investment to actually start the mine. Eye opening.

As far as being a China suck ? Perhaps. But what this storypoints out was that at the time Rio, BHP and vale operated a cartel to keep iron ore prices as high as possible and extract maximum value from China.

I suggest it's worth a read just to expand one's knowledge base.

 

[over9k]

The chinese government targets employment - they'll give you money to produce something even if you can't really sell it just so long as you promise you can employ people. There's a reason why they're as overcredited as they are.

With physical things like steel they then just produce it flat out whether there's demand or not and then fill their storage yards with whatever is surplus. Now, they're at the point of the storage yards all being full and so they're filling their (now empty) sports stadiums with it.

It suggests a glut of really cheap steel for the inevitable infrastructure spend we're going to see from basically all governments everywhere (which is great) but a continuing serious demand for iron ore.

The normal rules of supply/demand go out the window when it comes to chinese state owned (or just financed) companies and the amount they intervene or just write off on the government's books or whatever.

Hotcopper or one of the commodities-focused forums is where you should go for proper info on this stuff.

 

[basilio]

FMG has gone off on a serious run this morning. Up 70c - 4.2%. Certainly seems to have attracted some continuing support.

I think Dr Fauci saying that a COVID vaccine was likely in October/November could be a spark.

Fauci says vaccine is possible by October but more likely by November
Jessica Glenza

Director of the National Institute of Allergy and Infectious Diseases, Dr Anthony Fauci, refused to rule out the possibility of “October surprise” news of an effective vaccine.

Fauci made the comments as he announced Moderna and the NIAID had started a Phase 3 trial of a vaccine candidate in the US.

 

[Dona Ferentes]

How challenging was it for Twiggy to build his mine ?
You will look back and know you were part of history, like building the Sydney Harbour Bridge

FMG

 

[basilio]

The June Quarterly production report came out today.
Exceptionally good results in terms of shipping, cost control and profit.

I suspect yesterdays run and todays leap reflected this report.
I Hold.

Outstanding operating performance in Q4, contributing to record shipments for FY20, lower C1 costs and increased revenue realisation
https://www.fmgl.com.au/docs/default-source/announcements/2090882.pdf

 

[Value Collector]

The June Quarterly production report came out today.
Exceptionally good results in terms of shipping, cost control and profit.

I suspect yesterdays run and todays leap reflected this report.
I Hold.

Outstanding operating performance in Q4, contributing to record shipments for FY20, lower C1 costs and increased revenue realisation
https://www.fmgl.com.au/docs/default-source/announcements/2090882.pdf

Yes, very good results in the last quarter.

Of particular interest is the fact that these great results are for the quarter ending ending 30th June, and are based on an average Iron Ore price of $93.30 for the quarter, However the Iron Ore price is currently about $110, so for the current period we are logging results that are even better than in this report.

Also, the Eliwana Mine is scheduled to have first ore on train in December, thats only 5 months away, so they the higher grade product mix will kick in soon.

Eliwana was built to replace, the fire tail mine but I think there will be an over lap period, I don't think they will shut down the fire tail mine straight away, But I am unsure on this.

 

[basilio]

Sheaf of reports issued by FMG this morning.
The money shot was the Final Dividend of $1 per share. Could be a bit of a share rush in the next few days to take advantage of that announcement.

Overall a bit of a bonanza. I think Twiggy is going to go a serious buying spree with his billion dollar dividends.
https://www.fmgl.com.au/docs/defaul...20-results-announcement.pdf?sfvrsn=2fcd21ef_4

 

[over9k]

This morning's announcement:

Profit up 49% year on year.

 

[bux2000]

As my lifes journey continues there are always so many lessons to be learned

I sold about 1/3 of my small holding in FMG on 12/05/2020 for $11.81 only after reading a brokers recommendation to SELL with a valuation of $7.70...... that recommendation still stands.

Am I right to think brokers have never really cottoned on to the Twiggy story?

bux

 

[basilio]

As my lifes journey continues there are always so many lessons to be learned

I sold about 1/3 of my small holding in FMG on 12/05/2020 for $11.81 only after reading a brokers recommendation to SELL with a valuation of $7.70...... that recommendation still stands.

Am I right to think brokers have never really cottoned on to the Twiggy story?

bux

That is a very heroic "recommendation" from the brokers. Barely 3 months ago. A huge profit surge and 84c dividend in early part of the year. On going prospects looking bright. There has been no lightbulb announcement since then beyond ongoing favorable production achievements.

And they valued it at $7.70? Sounds dangerously incompetent .
It would be interesting to see the basis on which they made the earlier assessment and if/when they changed it.

 

[Value Collector]

That is a very heroic "recommendation" from the brokers. Barely 3 months ago. A huge profit surge and 84c dividend in early part of the year. On going prospects looking bright. There has been no lightbulb announcement since then beyond ongoing favorable production achievements.

And they valued it at $7.70? Sounds dangerously incompetent .
It would be interesting to see the basis on which they made the earlier assessment and if/when they changed it.

Yes, that does seem like a pretty crazy valuation, and would need some key metrics to turn very negative to see that price again in my opinion (which off course is not impossible in the grand scheme of geo politics, but in my opinion unlikely.

Net profit after tax per share was $2.29 AUD
Owner earnings / share $2.45 AUD (thats NPAT + depreciation figure - actual sustaining capital spent)
Dividend of $1.76 AUD for the year fully franked (9.4 % yeild on share price of $18.60)
Return on equity of 44% with equity per share of $6 AUD

--------------------
Here are my thoughts about todays report.

FMG is currently experiencing a period of very high profitability, the above results were based on a realised price of Iron Ore of $79 (spot price of $93), however the first two months of this financial year have seen prices over $120, which means realised prices are likely to be about $100 at the moment, which is a significant increase above the prices that generated the above figures.

Of course being a commodity business we don't know where prices will go longterm, but for now profits remain strong, and the share price seems undervalued even on a lower Iron ore price of last years $93/$79 realised.

The current share price is $18.56 which translates to a 9.4% dividend yield (13.5% including franking credit), and the business is currently over performing the metrics that created this result.

I am happy to hold at this level due to the fact that the current over performance of the business could create higher dividends and higher share price over the next 12 months, and the fact that the current share price is undervalued even at a reduce iron ore price, so I believe there is a decent margin of safety.

 

[over9k]

Sounds like a typical numbers guy broker that only ran the sums he had and could only see the numbers in front of him.

Brazil was always going to get annihilated and leave AU as the only producer left. That fact alone makes FMG a buy up to, considering the dividends now getting paid, $20/share easily. Even if you overestimated by 50%/underestimated by 33% (depending on how you look at it) at your $11.81 sell price, you're still in front.

There's no way you could have ever put an actual figure on that (which I have no doubt the broker wanted), but numbers will only ever get you so far and unfortunately numbers guys usually have terrible gut instincts (hence them being numbers guys).

I was posting about/trying to explain this in the "trading the trend" thread months ago and all I got was dismissal & ridicule for it.

Unfortunately, numbers guys all have massive ego's and can't even so much as admit that there might be *anything* that their calculations can't tell them.