Australian (ASX) Stock Market Forum

FMG - Fortescue Ltd

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over9k said:
See the announcement?

It is ex dividend day today though.
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Clearly there would be a pullback when it went ex dividend. But I think it has been running too hard in the past few months and essentially speculative.

The Director seemed to buy in at close to the top. It looked around the $18.40 point. Gets the divvie though!
___________
There was a good analysis of the tensions underlying Australia trade with China on the ABC. The Iron Ore industry was discussed in that context.

Why iron ore has been out of bounds in China's trade war with Australia — for now
https://www.abc.net.au/news/2020-08...out-of-bounds-in-the-china-trade-war/12611498
 
Yeah it's a $1 dividend and it's dropped about $1.40/share. Nothing to be concerned about.

China won't do anything about the iron ore. They need it for all their infrastructure etc and brazil's been annihilated so they don't have anyone else to buy from. It's all bluster.
 
basilio said:
Some serious profit taking with FMG since Friday.
Currently at $17.36 after reaching $19.50 plus.
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todays drop is pretty much exactly what the dividend was,

eg, total dividend value was $1.43 ($1 dividend + $0.43 franking credit)

So that considered, FMG was flat today, not down compared to Friday, meanwhile Iron Ore is still about $30 higher than it was last financial year, and the cash is rolling in building up to pay the next dividend.
 
Value Collector said:
todays drop is pretty much exactly what the dividend was,

eg, total dividend value was $1.43 ($1 dividend + $0.43 franking credit)

So that considered, FMG was flat today, not down compared to Friday, meanwhile Iron Ore is still about $30 higher than it was last financial year, and the cash is rolling in building up to pay the next dividend.
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Good story, but I am not buying it now that the gains have been already had. As @basilio pointed out earlier, I think the risk/reward is not worth it to jump in now.

Congrats on you for riding it all the way back from $2 VC. What's in your radar other than FMG ? What's the next FMG or 'Capilano Honey' you are doing research on ?
 
$1.8 average buy in for getting on VC's analysis :) good payout. Though i didn't put in a lot. 20% of a humble sized portfolio. FMG is simply and outperformer in its industry. The mining industry has been stagnant. Non-tech non-US markets are still depressed. We're not in the "boom" cycle in energy stocks. We're in the tail end.

Once economies recover we should see capital coming out of big tech and non cyclicals. The increasing inflation should spell an upward draught for Energy, mineral, gold stocks in general.

i think it would be a bad idea to cash out at this current price. let winners win properly.
 
also as someone mentioned FMG has a "great general bonus" so to speak with Twiggy. A visionary. Not some no name suit in 99% of aussie companies just there to listen to shareholders and pray they don't get sacked.

This is obv great thing. Companies with visionary CEOs like Facebook, Tesla do very very well compared to their peers.
 
aus_trader said:
Good story, but I am not buying it now that the gains have been already had. As @basilio pointed out earlier, I think the risk/reward is not worth it to jump in now.

Congrats on you for riding it all the way back from $2 VC. What's in your radar other than FMG ? What's the next FMG or 'Capilano Honey' you are doing research on ?
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I hold FMG and I still think it's a buy just FYI. Brazil's going to be obliterated for quite some time yet ;)
 
aus_trader said:
Good story, but I am not buying it now that the gains have been already had. As @basilio pointed out earlier, I think the risk/reward is not worth it to jump in now.
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Well, I mean it’s just a simple fact that the dividend was worth $1.43 and that’s pretty much what it dropped by on ex dividend date, so it’s flat so far.

maybe it will drop further, who knows, I can’t predict the ups and downs of the market.

All I can do is work out how much I think the company is worth based on different ROE’s and look to fundamentals to see how I think that will play out.

so far I am still in the camp of thinking that ROE will average above 25%, (60% currently), Iron ore is up again today, So I think FMG is still undervalued.

but we will have to wait and see.

—————
as for future ideas, I am working on two possibilities at the moment.
 
Time for me to not be lazy and do an assessment somewhere in the next couple months. Have held for just over a year (after finally getting in), currently at 15% of my portfolio.
 
no one can tell what the price will be. But compared to some stocks i held in token capacity such as Tesla- FMG has hardly moved at all. Energy market is in a slump. imo always keep a winner in a loser industry. weak hands made me sell 10 shares of tesla for cheap cheap cheap :(
 
Value Collector said:
as for future ideas, I am working on two possibilities at the moment.
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Cheers mate, keep us informed when you are ready to do so. There is no hurry VC, you can even wait till you sell out of FMG to re-invest the profits into the new prospects.

I am in no hurry to rush into anything that's high-flying. Congrats in getting in early. Although not as good as your FMG 10x I have had the opportunity to ride a few smaller winners. I am on a 3x small cap that's in the hottest sector of the asx. I am talking the same sector as APT, Z1P & SZL. I don't recommend anyone to buy it now, but I mentioned it because it's good to get on the baggers early. All my trades including the 3x small cap is posted in the Speculative Stock Portfolio, so I am not just making up stuff.
 
FMG have made an announcement that they are looking into green energy investments in PNG utilising Hydro power.

Fortescue Metals Group Ltd (Fortescue) confirms that its wholly owned subsidiary, Fortescue Future Industries Pty Ltd (Fortescue Future Industries), has entered into a Deed of Agreement with the Papua New Guinea (PNG) Government and its wholly owned corporation, Kumul Consolidated Holdings Limited (KCH).

Under the Deed, the parties will promptly investigate the feasibility of potential projects for development of PNG’s hydropower resources to support green industrial operations largely for export to global markets, and also for domestic consumption. This is consistent with Fortescue’s record of delivering both capital growth and yield to our shareholders while sharing the benefits of sustainable development and employment with our local communities.

Fortescue Future Industries shares Fortescue’s commitment to a green industry future and will work closely with local people and communities to establish training and long term careers. This is fully aligned with Fortescue’s approach from its inception that the communities in which we operate will benefit from our growth and development.

Subject to the completion of feasibility studies and approvals, individual projects will be developed by Fortescue Future Industries with ownership and project finance sources to be separately secured without recourse to Fortescue. Execution of studies and approach to capital investment will be consistent with Fortescue’s track record of developing multi billion dollar projects in the Pilbara, at an industry leading capital intensity.

Fortescue is a values-based business, committed to our strategic goals of ensuring balance sheet strength and flexibility, investing in the long term sustainability of our core business while pursuing growth and development opportunities. Our dividend policy remains a payout ratio of 50 to 80 per cent of Net Profit After Tax as we continue to deliver capital growth and superior returns to our shareholders. We do so by targeting the upper end of our dividend payout range.

Yours sincerely

Fortescue Metals Group Ltd
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https://www.fmgl.com.au/docs/defaul...stries-deed-of-agreement.pdf?sfvrsn=8274399_4
 
I know they're not an energy company, but green energy is *finally* becoming properly popular:

44.jpg
 
Ferret said:
I like FMG and think it is a really well run company. I get a bit nervous, though, when a company moves too far away from what it does best.

It will be interesting to see how this plays out.
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I know what you mean, I feel the same way, hopefully they do it in a way that isn’t “ betting the company”, and hopefully enough of the skills in infrastructure and financing carry over to give them a competitive advantage.

I don’t know know to what extent hydrogen or electricity could be exported from PNG, but yeah it’s an interesting story to watch and if it does become a viable way for FMG to deploy capital it will be a good diversification.
 
Value Collector said:
I know what you mean, I feel the same way, hopefully they do it in a way that isn’t “ betting the company”, and hopefully enough of the skills in infrastructure and financing carry over to give them a competitive advantage.

I don’t know know to what extent hydrogen or electricity could be exported from PNG, but yeah it’s an interesting story to watch and if it does become a viable way for FMG to deploy capital it will be a good diversification.
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From the Press release Twiggy made it clear Fortescue Futures would be financing and developing the PNG project off its own bat. There would be no drawdown from current mining operations.

He did say however they would be using their mining skills and experience to gain best engineering value for the proposal.

https://www.fmgl.com.au/docs/defaul...stries-deed-of-agreement.pdf?sfvrsn=8274399_4
 
basilio said:
From the Press release Twiggy made it clear Fortescue Futures would be financing and developing the PNG project off its own bat. There would be no drawdown from current mining operations.

He did say however they would be using their mining skills and experience to gain best engineering value for the proposal.

https://www.fmgl.com.au/docs/defaul...stries-deed-of-agreement.pdf?sfvrsn=8274399_4
Click to expand...

What they meant by that is that each project will be its own entity, with its own debt funding that is not recourse back to Fortescue, but Fortescue will be investing equity capital into the project, so if the project collapses all Fortescue can lose is their equity investment in that project, they are not on the hook to repay the debt funding.

So Fortescue will allocate a certain amount of capital/equity into the project, and fund the rest through bonds etc secured by the project, most infrastructure projects of this nature require the owners to fund at least 30% of the project costs through equity, and the balance is funded by debt.

This is a very common structure used by utilities all around the world.
 

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