FMG - Fortescue Ltd

[over9k]

Not sure about these points Over9K

1) When I checked out the net it seems that Adanis big announcement was literally just made today. Twiggy flagged this comprehensive new renewable energy program from mid 2020. The company infrastructures are developed. The short and longer term strategy plans are in place. He spent most this year looking for suitable international projects and partners and focused FMG's engineering team on a range of renewable energy projects that would be integrated into his current iron ore activities.

2) The rationale behind the focus on WA for renewable energy is because he intends to integrate them into his iron ore business. Bit hard to do that from Queensland. That doesn't mean he isn't interested in doing projects elsewhere in Australia. There just has to be a good business partner in the deal.

I'm pretty cautious about Adani as well. I think that have a lot of baggage in terms of dodgy governance and capacity to execute plans.

https://www.fmgl.com.au/ Check out Climate Change report

Adani Group: Sebi, DRI probing Adani Group companies, government tells Lok Sabha | India Business News - Times of India

India Business News: Market regulator Sebi and the Directorate of Revenue Intelligence (DRI) are investigating companies belonging to the Adani group for violations of som

timesofindia.indiatimes.com

I briefly worked for Guatam Adani's personal banker here, his australian money man, so the guy that actually had to figure out how to and then execute the way in which Guatam Adani got his money into australia for his australian based operations.

I kick myself every day for not buying some (a lot of) adani green way back.

Problem is, doing so would actually genuinely be getting into insider trading territory. It would be ridiculously easy for asic to prove a connection seeing as I literally worked for his money man.


True story.

 

[frugal.rock]

If it's any consolation rock, I don't know how much you did on this, but I did $6k USD on 3LNI a couple weeks back

I did around $600 AUD... would be less if I sold today obviously, but I don't seem to be able to get a free live commodity iron price chart...
made it all (x3) back today though and am over 50% cash now.

And no, it's no consolation that you blew 6k, I find that even more disturbing,.. however, is that where your nick comes from? ?

 

[over9k]

I did around $600 AUD... would be less if I sold today obviously, but I don't seem to be able to get a free live commodity iron price chart...
made it all (x3) back today though and am over 50% cash now.

And no, it's no consolation that you blew 6k, I find that even more disturbing,.. however, is that where your nick comes from? ?

Nah, over9k is an internet meme from waaaaaaay back.

What'd you make it back on?

 

[frugal.rock]

What'd you make it back on?

Choppity chop chop chop...
AXE man ?

 

[basilio]

View attachment 130584

I briefly worked for Guatam Adani's personal banker here, his australian money man, so the guy that actually had to figure out how to and then execute the way in which Guatam Adani got his money into australia for his australian based operations.

I kick myself every day for not buying some (a lot of) adani green way back.

Problem is, doing so would actually genuinely be getting into insider trading territory. It would be ridiculously easy for asic to prove a connection seeing as I literally worked for his money man.


True story.

Ha Ha !! Yep Adani Green Energy has certainly gone through the roof hasn't it . I suppose that must indicate some substantial activity well before todays announcement.

I do have a prejudice against Adani. My limited understanding of their operations have been that they sailed very close to the wind with their governance. The Queensland coal mine operation has been one such example.

Interesting about your connection though. Suggests you have a far more informed knowledge of their operation.

 

[qldfrog]

Pretty soft I think.
My Discretionary portfolio is green
(Was Bleeding yesterday)

Went from very green to a shade of green at close time.
Was heamorraging yesterday...
Not sure if BTD was already cooling down or my usual move down from open to close

 

[dat111]

Yep. Evergrande impacting FMG is a long shot imo.
FMG <- China Buying Iron Ore <- Construction industry <- Evergrande.

Each one of these links is not a strong link IMO.
Evergrande is just one of many property developers. Others will gladly pick up the slack they've left.
Construction industry crash does not mean Iron Ore crash (or low iron ore demand from China)
Iron Ore crash does not mean FMG as a company is in the sh*tter as long as their cost/t is low and competitive

Evergrande is an indicator for what is going on in the property development industry. Evergrande, not too long ago was a money making machine with their business model. External forces changed their business model but Evergrande did not take appropriate measures to stay whole. If Evergrande has to divest their assets quickly it will trickle to the rest of the property development industry and put financial pressure on those companies. Usually when a company has this much problem this fast, the problems come from government regulatory changes which put pressure on the entire industry also. So it is the snowball effect.

 

[dat111]

So far as FMG is concerned though what matters is that there's a market for their hydrogen and iron ore and it's profitable.

Probably 90% of all things sold arguably don't make sense in one way or another but if there's a buyer at a profitable price well that's what matters so far as the supplier is concerned.

Unfortunately a business model that depends upon someone wanting something because the government currently wants it to happen is perilous in the infancy stages. The government can redirect the rules at a whim causing the capital invested to be worthless. That is my take on hydrogen this early. There is not need for Fortescue to create an additional 15 Metric Tons of Hydrogen per year by 2030 when the world is only using 87 million Metric Tons and the majority being created is for oil refineries. If China and other countries don't get away from carbon based fuels all that we are doing is driving our wealth to other countries.
Iron ore has an outlet and has been used since the bronze age. I understand building a better mouse trap and supply and demand...

 

[over9k]

Ha Ha !! Yep Adani Green Energy has certainly gone through the roof hasn't it . I suppose that must indicate some substantial activity well before todays announcement.

I do have a prejudice against Adani. My limited understanding of their operations have been that they sailed very close to the wind with their governance. The Queensland coal mine operation has been one such example.

Interesting about your connection though. Suggests you have a far more informed knowledge of their operation.

A lot of the stuff we're seeing at the moment was set in motion years ago when the smartest money of all realised what shale oil was going to do to the entire planet.

I know I've posted this around here before but here's a presentation from way back in 2014 talking about what had just been set in motion at the time:

 

[over9k]

Ahahaha oh my god:

So who else is up for this rollercoaster?

 

[joeno]

Evergrande is an indicator for what is going on in the property development industry. Evergrande, not too long ago was a money making machine with their business model. External forces changed their business model but Evergrande did not take appropriate measures to stay whole. If Evergrande has to divest their assets quickly it will trickle to the rest of the property development industry and put financial pressure on those companies. Usually when a company has this much problem this fast, the problems come from government regulatory changes which put pressure on the entire industry also. So it is the snowball effect.

If the Chinese property market crashes it won't be because of Evergrande. It will be because the property market is overvalued.

Companies rise and fall all the time. *shrug* Evergrande is no exception and tbh they aren't even *that* big. It's just a property developer in China.

 

[dat111]

If the Chinese property market crashes it won't be because of Evergrande. It will be because the property market is overvalued.

Companies rise and fall all the time. *shrug* Evergrande is no exception and tbh they aren't even *that* big. It's just a property developer in China.

There is more to it than that... Things are worth what someone else is willing to pay for it... In China the saying is a little different.. Things are worth what communist China will allow you to pay for it through borrowing... China introduced rules to rein in the borrowing costs last year for developers. Those measures place a cap on debt in relation to a firm’s cash flows, assets and capital levels. Evergrande did not sufficiently adjust to those new rules. Who knows whether the rest of the developers made the necessary adjustments. Evergrande was simply the most indebted of the developers.

• Evergrande owns more than 1,300 real estate projects in over 280 cities in China.
• Its property services management arm is involved in nearly 2,800 projects across more than 310 cities in China.
• The company has seven units dabbling in a wide range of industries, including electric vehicles, health-care services, consumer products, video and television production units and even a theme park.
• The firm says it has 200,000 employees, but indirectly creates more than 3.8 million jobs every year, according to its website.
• Evergrande’s shares and bonds are included in indexes across Asia.

 

[dat111]

Unfortunately a business model that depends upon someone wanting something because the government currently wants it to happen is perilous in the infancy stages. The government can redirect the rules at a whim causing the capital invested to be worthless. That is my take on hydrogen this early. There is not need for Fortescue to create an additional 15 million Metric Tons of Hydrogen per year by 2030 when the world is only using 87 million Metric Tons and the majority being created is for oil refineries. If China and other countries don't get away from carbon based fuels all that we are doing is driving our wealth to other countries.
Iron ore has an outlet and has been used since the bronze age. I understand building a better mouse trap and supply and demand...

 

[joeno]

There is more to it than that... Things are worth what someone else is willing to pay for it... In China the saying is a little different.. Things are worth what communist China will allow you to pay for it through borrowing... China introduced rules to rein in the borrowing costs last year for developers. Those measures place a cap on debt in relation to a firm’s cash flows, assets and capital levels. Evergrande did not sufficiently adjust to those new rules. Who knows whether the rest of the developers made the necessary adjustments. Evergrande was simply the most indebted of the developers.

• Evergrande owns more than 1,300 real estate projects in over 280 cities in China.
• Its property services management arm is involved in nearly 2,800 projects across more than 310 cities in China.
• The company has seven units dabbling in a wide range of industries, including electric vehicles, health-care services, consumer products, video and television production units and even a theme park.
• The firm says it has 200,000 employees, but indirectly creates more than 3.8 million jobs every year, according to its website.
• Evergrande’s shares and bonds are included in indexes across Asia.

200,000 might sound like a lot. But for the population it isn't. CBA for example employs 40,000 in Australia. Adjusted for population, that would be like a company in China employing over 2,000,000. Which is not so crazy since there are companies that employ 1,000,000 in China.

Back to topic - Evergrande is just a big construction company. Not the biggest even. Its downfall will hurt the industry from a supply perspective but it is not a systematically important company from what i understand so it shouldn't affect Iron Ore demand much overall outside of perhaps the very short term.

 

[over9k]

Evergrande's been given a bailout. Repaying bond interest on the 23rd. Futures all flipped on the news, so has ASX et al.

 

[KevinBB]

Evergrande's been given a bailout. Repaying bond interest on the 23rd. Futures all flipped on the news, so has ASX et al.

News source? I've been trying to find something since markets started to move about 20 mins ago.

KH

 

[over9k]

However, here's a bit more context:

This wasn't just a hiccup or speed bump in an otherwise bull chinese market.

 

[over9k]

News source? I've been trying to find something since markets started to move about 20 mins ago.

KH

Bloomberg. Just broke/came across the screen. Announced 5 mins before the china open, so everyone are scrambling. CSI300's still opened ~2% into the red though.

Edit:

OMO = Open Market Operations for any newbies out there too embarrassed to ask

 

[KevinBB]

ok, thanks.

 

[over9k]

Now, who's brave enough to buy on the bounce...

Like I said, there's some serious long term headwinds for china as a whole. Will it keep moving up a bit for the meantime?

It's one of those "definite maybe's".

Then you have the inevitable further crackdowns by the chinese government we are no doubt going to see more of...


See where I'm going with this?

There's probably some short term money to be made if you're brave, but you would have to be brave.