- Joined
- 17 August 2006
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Don't hold but very positive looking "candle" today .... Good luck to you guys who hold
ps. I think Twiggy (even with all his multi-millions, is a legend Aussie, so good luck to him also)
Then obviously a green today +4%.
One thing I found interesting is that the announcement (Quarterly) came out early in the day and there was plenty of time to read / review and buy if happy.
But instead of buying FMG was down -2.9% yesterday
Then obviously a green today +4%.
Maybe people were unsure about the US Markets (that includes me) and they had a good night so maybe that was the trigger?
FMG share price and company information for ASX:FMG
View today’s FMG share price, options, bonds, hybrids and warrants. View announcements, advanced pricing charts, trading status, fundamentals, dividend information, peer analysis and key company information.www2.asx.com.au
View attachment 113956
Based on the $93 Iron ore price they averaged last year, they had a return on equity of 44.6%, which is very high and probably won't hang around forever, although with the current $120 Iron ore price they are probably earning 60% ROE.
Based on different possible ROE figures that could be achieved these are what I believe the share price should be (if ROE averaged at the levels for the longterm)
45% ROE - $39.57
35% ROE - $28.20
25% ROE - $18.24
15% ROE - $12.36
Now I don't believe a ROE of 35% or above could be sustained over the longterm, but I do think that we will be above that level for at least this financial year, and that it will eventually settle some where between 25% and 35% meaning based on that metric a share price of $23 to $25 is very fair, so there is a great upside potential in my option, and a limited down side if the ROE did drop back to 25% or 20%
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I then also like to make an assessment of what the possible price people (including myself) would be happy to pay or hold at based on the range of possible dividends, and again I then pick which outcome I think is likely.
I think a fully franked dividend of 7% (10% gross) long term is pretty attractive, while alot of people would still be happy with a 5% dividend (7.1% gross).
So here is where the share price would be to achieve those dividend yields based on different dividends.
Current full year dividend ($1.76 full year) -
$25.16 (7%) - $35.20 (5%)
$2 / share (final dividend annualised)
$28.60 (7%) - $40 (5%)
$1 / share
$14.30 (7%). - $20.00 (5%)
$0.76 / share
$10.86 (7%) - $15.20 (5%)
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So based on the above metrics (and some others) my opinion of different price points is as follows.
$19.00 (pretty safe to hold at, should see very good dividend return)
$25.16 (probable result, and should produce a decent dividend retune)
$28.60 (possible outcome, may look to reduce holding, still a good dividend though so no rush to sell)
$33.00+ (blue sky valuation, requires $120+ Iron ore price for long time, definitely be reducing my holding back to maybe 10% of my current position).
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now as long as we can keep out of any Political trade wars
I actually don’t think they can afford to threaten their iron ore supply, they are in the manufacturing business, they need raw materials, they can stop importing luxury goods etc for a while, but not Iron Ore, the price is already through the roof,You are pushing the boat out on this one.
We are in a political trade war like it or not, not of our choosing but definitely real.
I have a bad feeling that China will use our one and only trump card to beat us up again.
Brazil iron ore mines will boom and ours will plummet once Brazil gets started again.
Brazil iron ore mines will boom and ours will plummet once Brazil gets started again.
Without the political overture for effect, I would be very surprised if China hasnt enough stockpiled iron ore, to squeeze our bollocks really hard.You are pushing the boat out on this one.
We are in a political trade war like it or not, not of our choosing but definitely real.
I have a bad feeling that China will use our one and only trump card to beat us up again.
Brazil iron ore mines will boom and ours will plummet once Brazil gets started again.
Without the political overture for effect, I would be very surprised if China hasnt enough stockpiled iron ore, to squeeze our bollocks really hard.
There is a reason Twiggy is diversifying IMO and it isnt because he feels more exposure to iron ore is a winner ATM.
With our dependence on China buying our resources, to fund our welfare, it doesnt take a genius to work out how fragile that link is.
One hopes you are correct.Unfortunately china is a few moves ahead, its always preplanned with them so logic would dictate they have io covered
Without the political overture for effect, I would be very surprised if China hasnt enough stockpiled iron ore, to squeeze our bollocks really hard.
Interesting podcast InvestoBoy, they make reference to the stockpiling at 24 min mark, hopefully they are correct and China keeps pumping out the steel at the record levels.I am not sure that is correct.
Robert Rennie was on the BIP show recently discussing this in extreme detail
Ep 25 - Westpac's Robert Rennie - The benefits of RCEP, and the future of global trade and manufacturing | Theory of Thing Investment Podcast
Westpac Global Head of Financial Market Strategy Robert Rennie joins us to explain the details of the vast RCEP trade deal, and what it means in an age of shifting priorities on global tradeshows.acast.com
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