FMG - Fortescue Ltd

[njc.corp]

Miner good read-

i also had a look at the guys article on may 2007 and i am a bit stuck-

i mean i have been on fmg for a while(made good money) sold out for a good profit and also bought back in more the other day-but i am having trouble understanding the may article-
could some explain to me what it means that the world will pay 10-12 times?

what does that mean-

http://www.eurekareport.com.au/iis/iis.nsf/pages/9544F0377F65BF80CA2572D10000A107?OpenDocument

Lets just say Fortescue does generate earnings per share of $11.90 in 2011-12. The world will pay 10–12 times earnings for that annuity stream, which gives you a 2011-12 price target of $119.00 to $142.00. The 2011-12 market capitalisation could be $31–37 billion, placing Fortescue among Australia’s top 10 stocks. This could all happen in the next four financial years.

Otherwise a good read-

i would also like to ask the asf members who jump on fmg or did not-are u guys looking for a other fmg stock-condersing it started in the where abouts of 64 cents to 80 cents

is this how we trade mining now-looking for the next hot shot?

Thanks

Nick--

 

[Duckman#72]

Boggo good work mate...ive been saying we will see sub $6.00 in FMG but i thought it might have support until next week, so its now around $6.00 which only confirms to me it will see sub $5.00 as early as wednesday,I await the february construction report which should have arrived before the easter break,it is giving some the chance to get out as 1 look on the sell side tells you the whole picture:bad news on the way.The reports on the railway never tell you we are this many kms from completion,no all you get is 90% complete(it does not say how far to go.) as of the january construction report,the march update shows alot of pics bit wont say how far before the tracks are finished,so the track is 260kms out of cloud break at 90% done as per the report released on 19/2/08,but where does the 10% to go begin???end of january or the 19/2/08..the original foos was january 2008 so it is already 4 months overdue,as the rail contract was 260kms over 25 months,which gave them 10.4 kms to lay each month but since then you have had the dramas of replacing the contractors plus imo the deadline was set too tight,by fmg's january report they say they have got 26kms left to lay in(lets say from 1/2/08-14/5/08)in 104 days...at the supposed rate of 10kms per month they would make it however the secrecy that surrounds the actual kms left to lay plus all the other associated infrastructure work required,there would seem to be alot more work is needed to get the rail finished on time,thats when FMG will really get a slamming,when they fess up to not having enough time, thereby the remainder of the ore has to go by road,that being the case they should be getting the ore as far up the track for loading on the roadtrains to lessen the costs of the road haulage & to give them a parachute for the fall...,going by the start of the rail,the current 10% figure i believe being more like 10% to go at may foos,they will be 25-30kms short on the line,the rumours & current sp do lend heavily to the deadline being missed by that margin.the sell side says it all as if FMG where putting this all together with 54 days left notwithstanding the dows rumbles then FMG would be rockin'...looks like sub $5.00 to be only days away as previously stated,plus ol mate twigster getting a shovel in his hands.priceless...TB

first to get his railway on this list you gotta finish the line,so looks like on the shovel first...TB,nice little gold number for twiggy...

Congratulations FMG for your success.

Perhaps even more amazing are posts like the one about written only weeks ago........which was AFTER, Charlie Aitken from Southern Cross equities(Eureka Report) had publicly stated that there would not be any problems with the railway. I believe his exact words were "it(ore) will be on trains all the way. There will be no double-handling".

I know that we(investors) are rightfully a sceptical lot, but sometimes we look too hard to find faults. Sometimes things turn out just like they have been announced.

Duckman

 

[njc.corp]

Congratulations FMG for your success.

Perhaps even more amazing are posts like the one about written only weeks ago........which was AFTER, Charlie Aitken from Southern Cross equities(Eureka Report) had publicly stated that there would not be any problems with the railway. I believe his exact words were "it(ore) will be on trains all the way. There will be no double-handling".

I know that we(investors) are rightfully a sceptical lot, but sometimes we look too hard to find faults. Sometimes things turn out just like they have been announced.

Duckman

duckman- i like your last sentence-but i think that most skeptics a) did not have money to invest and un happy how fmg turned out or b) or they are till waiting for more news or waiting for bad news on fmg to buy or say i told u so-(from the chart its been pretty smooth sailing)

this is my personal veiw on fmg and nothing else of how i jumped on fmg-

1. a freind told me about it and said jump on-i said to myself if i listen to everyone's tip i am going to end up broke-has u can't believe everyone's tip

2.so i did a bit of research and said -na- to many things have not been met like the deadline and before they even shipped they were talking about 100+mtpa-
i still did not buy to that point as it was just a verbal game-

3.then i got some pics emailed to me showing me the construction of the operation-that got me in-just the scale of what they were doing was worth the risk-

i felt after i seen those pics that this was to big of a scale for them to turning back from either parties-

so in a way-i was a skeptic until something as silly as a picture got me in-

bought in at 7.77 sold half for a decent profit and decided to buy in more before the deadline and also bought in more the other day when the market still did not like the news of the ship being ready to load up-

Thats my little story

Thanks

Nick--

 

[agro]

for those interested, FMG is mentioned on Sunday Business on Sky Business Channel today..

nothing much new - Greg Rowley mentioning that they want to have 2 railway lines so they can increase their output,, got into the market at the right time and took opportunity of the iron ore prices..

also, the fact that they want to remain independently owned and Australian..

Twiggy with a 36% stake cannot subject a chinese company to full ownership,

unlike with Anaconda when his stake was small he didn't have much say..


good times ahead.

 

[agro]

Extract from Eureka Report Article by Charlie Aitken

Charlie was the lone Australian broker who said FMG will reach $100 (before split) and many so called experts (skeptics ?) laughed at him.
He and the believers in FMG are now laughing at those skeptics

I thought you would be interested to read the extract and for details please refer Eureka Report http://www.eurekareport.com.au/
"FMG Moving into a new higher trading range

As the market now comes around to focusing on Fortescue as a 100 mtpa producer, the stock – currently trading at about $9.20 – will trade between $12.40 and $15. That also hasn't assumed Fortescue pays any dividends, which they are likely to do.

Over the next 12–18 months the stock will track up to the "100 mtpa" trading range of $12.40–15. I also suspect during that period the Chinese Government or Anglo American will come on to the register.

So even at just the interim production target of 100 mtpa I can see Fortescue's share price being almost double today's price over the next three years."

yeah imagine if they had a dividend of between 50 cents to $1.00,

that would certainly bring every man and his dog on board!

not to mention with supposedly increased earnings from increased output the dividend is likely to increase.

look at Woodside for example, was under $20 when it was an explorer a couple years ago, now $60+ the biggest in Australia

 

[reece55]

Miner good read-

i also had a look at the guys article on may 2007 and i am a bit stuck-

i mean i have been on fmg for a while(made good money) sold out for a good profit and also bought back in more the other day-but i am having trouble understanding the may article-
could some explain to me what it means that the world will pay 10-12 times?

what does that mean-

http://www.eurekareport.com.au/iis/iis.nsf/pages/9544F0377F65BF80CA2572D10000A107?OpenDocument

Lets just say Fortescue does generate earnings per share of $11.90 in 2011-12. The world will pay 10–12 times earnings for that annuity stream, which gives you a 2011-12 price target of $119.00 to $142.00. The 2011-12 market capitalisation could be $31–37 billion, placing Fortescue among Australia’s top 10 stocks. This could all happen in the next four financial years.

Otherwise a good read-

i would also like to ask the asf members who jump on fmg or did not-are u guys looking for a other fmg stock-condersing it started in the where abouts of 64 cents to 80 cents

is this how we trade mining now-looking for the next hot shot?

Thanks

Nick--

Can anyone actually attach the PDF of the report........ It wants me to log in...

Those price targets are absolutely outrageous..... Even if by year 4 they are at 100 MTPA, their forecast for Iron Ore prices must be like $300 per tonne for that kind of price target.... What are we all living in fairy land????

Oh, hold on, who's behind Eureka, Alan Kolher...... Enough said....

Cheers

 

[agro]

Can anyone actually attach the PDF of the report........ It wants me to log in...

Those price targets are absolutely outrageous..... Even if by year 4 they are at 100 MTPA, their forecast for Iron Ore prices must be like $300 per tonne for that kind of price target.... What are we all living in fairy land????

Oh, hold on, who's behind Eureka, Alan Kolher...... Enough said....

Cheers

no pdf but here's what it states:


PORTFOLIO POINT: Fortescue has proved the critics wrong by becoming an iron ore exporter, and that is just stage one of its plans.


It was only a little over a year ago that I first visited Fortescue Metal Group's (FMG) port and mine construction sites in Port Hedland and the Pilbara. Today I am again writing to you live from Port Hedland, but this time I can confirm Fortescue has moved from an "explorer" to an "exporter".

Yesterday, May 15, at 9.30am, I was part of a small group who witnessed Fortescue's first load of commercial iron ore being loaded on to a cape-sized Baosteel ship. Fortescue is no longer a concept, it is a reality.

It is difficult to comprehend what Fortescue has achieved in the 13 months since I was last up here. It is truly staggering to see the completed first stage of the project, particularly given that just 13 months ago there was still a huge amount of physical construction work to be done. Remember it was only 13 months ago that most people believed that "surface mining" wouldn't work and Fortescue would "never" be able to produce at anywhere near 55 million tonnes per annum (mtpa), if they were able to produce at all.

Thirteen months ago no mainstream investment banks covered the stock; now they all do. It is a tribute to the dynamism of this company that is just five years old that the first stage of this project could be completed on time and within budget. It is a tribute to the dynamism of this young company that they could beat a production target date that most people believed was "too aggressive".

Today's "first ore on ship" celebrations felt like one of those old "Swan Lager" advertisements. You remember the ones: They said you'd never make it, but you finally came through. For all of you who've made it, this Swan's made for you.

To see the Fortescue ship-loader loading Fortescue iron ore that has been delivered to the Fortescue port on Fortescue trains on to a Baosteel ship right opposite BHP's operations is just such a huge victory for an underdog. Make no mistake: Fortescue has been a massive underdog and that is what really attracted me to the story after that first visit. Today Fortescue is in an elite and exclusive club that call themselves "iron ore producers".

To see how far Fortescue has come in just over a year, I’ve attached that report from last year (see Fortescue: blue sky miner).


Where to from here?

To believe that Andrew Forrest and his team would be content as a 55 mtpa iron ore producer would be an error. Once they have proven "practical completion" of stage one by beating a series of production hurdles (to satisfy financiers) I suspect focus will then turn to stage two of the production ramp up.

In a recent note (see Fortescue has arrived) I explored the next leg of the Fortescue production growth, earnings growth, dividend growth, and in turn, share price growth story. I am going to revisit that work below

The debate about Fortescue is no longer whether it will work but what it will earn and what the market will pay for those earnings.

In my view this isn't about discounted cash flows or net present values. This about working out what the potential earnings per share is and then having a shot at what multiple the market will pay for those earnings. This is a simple P/E-based price target scenario analysis.

Before you say that's too basic, remember my very first buy recommendation on Fortescue (at $1.80 with a $5 12 month target) was based on the same methodology. My now somewhat famous "$100" long-term target (adjusted to $10 after the share spilt) was also based on having a shot at estimating earnings over the next five years. So far, that P/E-based price target approach has proved more accurate than any other valuation or price target setting approach. However, my rough "e" estimates have been too low because we underestimated iron ore price rises.


100mtpa by 2010

With the first ore on ship achieved ahead of schedule, the market will now look to the future and start speculating about 100 mtpa production. Let's do some really basic analysis here of what is a really basic business.

Let's assume in 2009-10 that Fortescue produces 100 million tonnes at an average margin of $50 a tonne (conservative). That's EBIT of $5 billion. Fortescue pays some corporate tax (30% conservative) and that leaves net profit after tax of about $3.5 billion. Fortescue has 2,802,393,400 shares on issue, of which an amazing 70% are owned by just five parties and the top 20 shareholders own 92%. Earnings per share works out $1.24 on that scenario and I think the market will pay an absolute minimum of 10 times for that earnings stream (globally unique stock in ultra-politically stable country). That generates a price target of $12.40 per share.

prawn_86 should read that, again would like to hear his comments

The more likely scenario is that the market pays 12 times for that earnings stream, which generates a price target of $14.88.

I'll be laughed out of town by sceptics for this analysis but I was also laughed out of town when I first speculated about Fortescue earnings-based share price targets 12 months ago. In reality, those initial estimates have proved very conservative.


Moving into a new higher trading range

As the market now comes around to focusing on Fortescue as a 100 mtpa producer, the stock – currently trading at about $9.20 – will trade between $12.40 and $15. That also hasn't assumed Fortescue pays any dividends, which they are likely to do.

Over the next 12–18 months the stock will track up to the "100 mtpa" trading range of $12.40–15. I also suspect during that period the Chinese Government or Anglo American will come on to the register.

So even at just the interim production target of 100 mtpa I can see Fortescue's share price being almost double today's price over the next three years.

Iron ore is the highest economic rent business in all of resources. It is a scaleable logistics game with wonderful margins. Once you have the logistics in place you are in an elite club. Some of the members of that elite club have previously undercut other members of the club, which has led to a multi-decade mispricing of Australian product. BHP is ending that mispricing and Australian producers will be the beneficiaries. Australian producers will get the freight differential one way or another. I also believe iron ore "benchmark" prices will rise again next year.

While many investors will naturally think "I've missed the Fortescue boat", I believe that certainly isn't the case. You have missed the share price all but discount a 55 mtpa producer, but you are still buying a 100 mtpa, 200 mtpa or eventually a 300 mtpa producer very, very cheaply.

Fortescue remains a strong buy and is the great " pure play" winner in all of this. It has done such an admirable job against enormous odds and enormous scepticism. It is now a physical "producer" and from this point domestic investors who need to see cash flow, can buy the stock.

Fortescue is the biggest story in Australian resources and very few Australian institutions own it (yet). If you build it they will come. Today the first ship came and it was great to see it loaded live.


Charlie Aitken is a director of Southern Cross Equities, which is a paid adviser to Fortescue Metals Group.

 

[Miner]

Thanks Agro for publishing the Eureka report for the greater benefit of the ASF community. I am sure others will appreciate you too.

Charlie has also published some ratings for top 20 stocks in the same edition of Eureka report. There is no direct thread for that, I can send the extract through PM. Due to copy right issue do not want to get flogged by moderator for publishing the same in open forum

Regards

 

[michael_selway]

no pdf but here's what it states:


PORTFOLIO POINT: Fortescue has proved the critics wrong by becoming an iron ore exporter, and that is just stage one of its plans.


It was only a little over a year ago that I first visited Fortescue Metal Group's (FMG) port and mine construction sites in Port Hedland and the Pilbara. Today I am again writing to you live from Port Hedland, but this time I can confirm Fortescue has moved from an "explorer" to an "exporter".

Yesterday, May 15, at 9.30am, I was part of a small group who witnessed Fortescue's first load of commercial iron ore being loaded on to a cape-sized Baosteel ship. Fortescue is no longer a concept, it is a reality.

It is difficult to comprehend what Fortescue has achieved in the 13 months since I was last up here. It is truly staggering to see the completed first stage of the project, particularly given that just 13 months ago there was still a huge amount of physical construction work to be done. Remember it was only 13 months ago that most people believed that "surface mining" wouldn't work and Fortescue would "never" be able to produce at anywhere near 55 million tonnes per annum (mtpa), if they were able to produce at all.

Thirteen months ago no mainstream investment banks covered the stock; now they all do. It is a tribute to the dynamism of this company that is just five years old that the first stage of this project could be completed on time and within budget. It is a tribute to the dynamism of this young company that they could beat a production target date that most people believed was "too aggressive".

Today's "first ore on ship" celebrations felt like one of those old "Swan Lager" advertisements. You remember the ones: They said you'd never make it, but you finally came through. For all of you who've made it, this Swan's made for you.

To see the Fortescue ship-loader loading Fortescue iron ore that has been delivered to the Fortescue port on Fortescue trains on to a Baosteel ship right opposite BHP's operations is just such a huge victory for an underdog. Make no mistake: Fortescue has been a massive underdog and that is what really attracted me to the story after that first visit. Today Fortescue is in an elite and exclusive club that call themselves "iron ore producers".

To see how far Fortescue has come in just over a year, I’ve attached that report from last year (see Fortescue: blue sky miner).


Where to from here?

To believe that Andrew Forrest and his team would be content as a 55 mtpa iron ore producer would be an error. Once they have proven "practical completion" of stage one by beating a series of production hurdles (to satisfy financiers) I suspect focus will then turn to stage two of the production ramp up.

In a recent note (see Fortescue has arrived) I explored the next leg of the Fortescue production growth, earnings growth, dividend growth, and in turn, share price growth story. I am going to revisit that work below

The debate about Fortescue is no longer whether it will work but what it will earn and what the market will pay for those earnings.

In my view this isn't about discounted cash flows or net present values. This about working out what the potential earnings per share is and then having a shot at what multiple the market will pay for those earnings. This is a simple P/E-based price target scenario analysis.

Before you say that's too basic, remember my very first buy recommendation on Fortescue (at $1.80 with a $5 12 month target) was based on the same methodology. My now somewhat famous "$100" long-term target (adjusted to $10 after the share spilt) was also based on having a shot at estimating earnings over the next five years. So far, that P/E-based price target approach has proved more accurate than any other valuation or price target setting approach. However, my rough "e" estimates have been too low because we underestimated iron ore price rises.


100mtpa by 2010

With the first ore on ship achieved ahead of schedule, the market will now look to the future and start speculating about 100 mtpa production. Let's do some really basic analysis here of what is a really basic business.

Let's assume in 2009-10 that Fortescue produces 100 million tonnes at an average margin of $50 a tonne (conservative). That's EBIT of $5 billion. Fortescue pays some corporate tax (30% conservative) and that leaves net profit after tax of about $3.5 billion. Fortescue has 2,802,393,400 shares on issue, of which an amazing 70% are owned by just five parties and the top 20 shareholders own 92%. Earnings per share works out $1.24 on that scenario and I think the market will pay an absolute minimum of 10 times for that earnings stream (globally unique stock in ultra-politically stable country). That generates a price target of $12.40 per share.

prawn_86 should read that, again would like to hear his comments

The more likely scenario is that the market pays 12 times for that earnings stream, which generates a price target of $14.88.

I'll be laughed out of town by sceptics for this analysis but I was also laughed out of town when I first speculated about Fortescue earnings-based share price targets 12 months ago. In reality, those initial estimates have proved very conservative.


Moving into a new higher trading range

As the market now comes around to focusing on Fortescue as a 100 mtpa producer, the stock – currently trading at about $9.20 – will trade between $12.40 and $15. That also hasn't assumed Fortescue pays any dividends, which they are likely to do.

Over the next 12–18 months the stock will track up to the "100 mtpa" trading range of $12.40–15. I also suspect during that period the Chinese Government or Anglo American will come on to the register.

So even at just the interim production target of 100 mtpa I can see Fortescue's share price being almost double today's price over the next three years.

Iron ore is the highest economic rent business in all of resources. It is a scaleable logistics game with wonderful margins. Once you have the logistics in place you are in an elite club. Some of the members of that elite club have previously undercut other members of the club, which has led to a multi-decade mispricing of Australian product. BHP is ending that mispricing and Australian producers will be the beneficiaries. Australian producers will get the freight differential one way or another. I also believe iron ore "benchmark" prices will rise again next year.

While many investors will naturally think "I've missed the Fortescue boat", I believe that certainly isn't the case. You have missed the share price all but discount a 55 mtpa producer, but you are still buying a 100 mtpa, 200 mtpa or eventually a 300 mtpa producer very, very cheaply.

Fortescue remains a strong buy and is the great " pure play" winner in all of this. It has done such an admirable job against enormous odds and enormous scepticism. It is now a physical "producer" and from this point domestic investors who need to see cash flow, can buy the stock.

Fortescue is the biggest story in Australian resources and very few Australian institutions own it (yet). If you build it they will come. Today the first ship came and it was great to see it loaded live.


Charlie Aitken is a director of Southern Cross Equities, which is a paid adviser to Fortescue Metals Group.

Do you know what the mine life is of FMG at the max production rate (MTPA)?

Also PE of 12 is too high in such an environment (risk) imo, esp if it doesnt pay any dividends etc

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -2.6 -3.0 31.2 82.3
DPS 0.0 0.0 0.0 0.0

Thanks

MS

Back
Date: 16/5/2008
Author: Julie-Anne Sprague; Michael Vaughan
Source: The Australian Financial Review --- Page: 1/57
A number of leading businesspeople and politicians celebrated a milestone withAndrew Forrest on 15 May 2008 in Western Australia (WA). The CEO of iron oremining company Fortescue Metals Group was officially starting the loading ofiron ore from the $A2.8bn mine it has built along with rail and port facilitiesin the Pilbara region of WA. There had been many doubters of the project, butForrest has been vindicated by a massive boost to Fortescue's share price,in the process also becoming Australia's richest man. On the day, the stockclosed $A0.11 lower at $A9.24. Forrest admits readily that his track record inthe resources sector also shows some spectacular failures. He is not averse toChinese investment in Fortescue, and is donating the money from the sale of thefirst 5,000 tonnes of ore, to earthquake victims in that country

Date: 16/5/2008
Author: Jamie Freed
Source: The Sydney Morning Herald --- Page: 21
Fortescue Metals Group CEO, Andrew Forrest, welcomes interest from Chinesecompanies but states he will always retain a 36% stake. Forrest has learned tomaintain a large holding in his ventures after losing control of AnacondaNickel. Meanwhile, analysts are impressed with Fortescue's effort to shipiron ore for the first time from the Pilbara region on 15 May 2008, just fouryears after the discovery of the Cloud Break deposit. Fortescue is expected toannounce an increase of production to 100 million tonnes annually from 50million tonnes in July 2008, with the long-term goal of producing 200 milliontonnes per year

 

[Duckman#72]

Can anyone actually attach the PDF of the report........ It wants me to log in...

Those price targets are absolutely outrageous..... Even if by year 4 they are at 100 MTPA, their forecast for Iron Ore prices must be like $300 per tonne for that kind of price target.... What are we all living in fairy land????

Oh, hold on, who's behind Eureka, Alan Kolher...... Enough said....

Cheers

Hi Reece

If you think they are living in Fairyland at Eureka, you might like to have a read of Charlie Aitkens FMG report dated 4 May 2007. Despite being laughed at for his bullish outlook - FMG has grown (both company and SP) much faster than his estimates.

The article written in May last year is a very good read - very well researched and provides a very compelling argument to buy FMG. I bought at $34.00 on the basis of his report. Back then Charlie was not a paid adviser to FMG. People can have a go at biased reporting but he was putting his money where his mouth is, well before he was on Twiggy's payroll.

Duckman

 

[reece55]

Let's assume in 2009-10 that Fortescue produces 100 million tonnes at an average margin of $50 a tonne (conservative). That's EBIT of $5 billion. Fortescue pays some corporate tax (30% conservative) and that leaves net profit after tax of about $3.5 billion. Fortescue has 2,802,393,400 shares on issue, of which an amazing 70% are owned by just five parties and the top 20 shareholders own 92%. Earnings per share works out $1.24 on that scenario and I think the market will pay an absolute minimum of 10 times for that earnings stream (globally unique stock in ultra-politically stable country). That generates a price target of $12.40 per share.

prawn_86 should read that, again would like to hear his comments

Right
Firstly, I think FMG getting up to 100 MTPA in one year after it took them 4 years to construct the infrastructure to get to 45 is a complete joke. BHP and Rio have been there for years and at present they are at 110. I spoke to a Geo who worked with BHP and their internal target in 3 years is to get to 200 MTPA - he reckons it will be a serious ask, because at 110 there is absolutely no capacity left.....

The next thing is that earnings multiples on a mining stock is a waste of time - dcf is the way to go for this sucker.

Attached is a DCF I did back in December this year and I stick by it - I forecast they will reach 100 MTPA by year 5 and it will cost them about 4.5 Bil to upgrade the thing to actually ship the 100 MTPA of ore. I then have another lower case valuation. Middle of the range is about 6.50...... Sure, there could be a premium for the possibility that China will take them out, if that is the case then the price could be higher. But $30 valuations - MWAHAHAHA..... the brokers need to get themselves out of the sky.....

Any intelligent responses here, or are we all just going to talk about white fluffy fairytales spun by brokers????? I'd be more than happy to debate with someone who actually has some numbers to spin with insight, rather than broker rubbish....

Cheers

 

[njc.corp]

does anyone have any news or idea if the ship has left or when its leaving?

and i cant seem to find the loading rate per hour at the port only the loading rate at the mine itself-

any info would be helpful-

Thanks

Nick--

 

[agro]

does anyone have any news or idea if the ship has left or when its leaving?

and i cant seem to find the loading rate per hour at the port only the loading rate at the mine itself-

any info would be helpful-

Thanks

Nick--

i was thought to beleive that it has shipped out on the 15th and that i might take a week or two to get to china?

hence the celebrations.

 

[michael_selway]

Right
Firstly, I think FMG getting up to 100 MTPA in one year after it took them 4 years to construct the infrastructure to get to 45 is a complete joke. BHP and Rio have been there for years and at present they are at 110. I spoke to a Geo who worked with BHP and their internal target in 3 years is to get to 200 MTPA - he reckons it will be a serious ask, because at 110 there is absolutely no capacity left.....

The next thing is that earnings multiples on a mining stock is a waste of time - dcf is the way to go for this sucker.

Attached is a DCF I did back in December this year and I stick by it - I forecast they will reach 100 MTPA by year 5 and it will cost them about 4.5 Bil to upgrade the thing to actually ship the 100 MTPA of ore. I then have another lower case valuation. Middle of the range is about 6.50...... Sure, there could be a premium for the possibility that China will take them out, if that is the case then the price could be higher. But $30 valuations - MWAHAHAHA..... the brokers need to get themselves out of the sky.....

Any intelligent responses here, or are we all just going to talk about white fluffy fairytales spun by brokers????? I'd be more than happy to debate with someone who actually has some numbers to spin with insight, rather than broker rubbish....

Cheers

Hi I noticed in your forecasts you predict the prices to go higher as time goes by except for a few years?

ALso have you got any similar analysis on anyother iron ore stocks?

thx

MS

 

[Frankhalo]

Hey Reece

Forget about your charts / numbers etc, one thing about this stock its driven by pure market sentiment and a well oil marketing unit. It’s also backed up by product / infrastructure on the ground and a strong client base. It’s been kicked in the teeth for the last 5 years by the instos and its come out smiling from ear to ear. Fortescue has a knack for surprising the market, if you have followed this stock for the last 5 years you will know that to be the case, whenever they said it couldn't be done, Fortescue proved them wrong. As for figures the China story is measured in decades, Iron ore prices increasing at a healthy rate and we have India on the side lines. Two / three years ago would you have believed $200 per ton on the spot market.

Regardless my two cents, brilliant performing share to hold in any portfolio...period, and it just keeps getting better.

Regards

Frank

 

[SenTineL]

It's an impressive analysis Reece but i also agree with Frank, i think FMG was a one in a million and maybe all these by the book analyses don't apply to this company.

Market sentiment is a powerfull thing and with Asia being iron ore hungry and FMG providing an alternative to the big competitors they will lap it up.

 

[renim]

Why would it take FMG 4 years to ramp to 100mtpA. My wild bet is more like one-two year. Consider their ramp up to more like phase 2 in a 3 phase project. with the first phase taking all the time, and the 2nd and 3rd phase taking 18 months each. This stock still has a ton of upside.

 

[renim]

I haven't recently done an analysis on FMG, (i did a rough comparison with BHP some time ago on this forum). Rough and ready expectation, current price is reasonable, and as further capacity comes onstream, prices will increase. This is a 50mtpa operation, have you guys ever seen a 50mtpa port? they are massive, if they hived off the port alone, they would effectively eliminate their debt. Just compare it to BBI.

IMHO they have performed unrealistically well so far. That is what separates the great companies from the good companies.

Also recent news articles from China, suggest that the Chinese had tried to depress the FMG price down to a point where they could take it over, but didn't succeed, so at least the Aussie institutions have good company, someone high in China missed the boat big time for his company too.

As far cost of production, iron ore mine production costs are available from the web, FMG's own graph is not unreasonable. Anyway a quick note on the cost curves is that there are a handfull of large really competitive producers FMG, CVRD, Rio, BHP, and then there is everyone else..

 

[renim]

Now for some speculation, will Mr Forrest be interested in dividends, I think his vision for FMG is big dividends. This company could soon become a major dividend stock, with a bonus of a realistic plan to quadruple earnings in a 3 year time span.

 

[njc.corp]

Why would it take FMG 4 years to ramp to 100mtpA. My wild bet is more like one-two year. Consider their ramp up to more like phase 2 in a 3 phase project. with the first phase taking all the time, and the 2nd and 3rd phase taking 18 months each. This stock still has a ton of upside.

Renim-has a fmg holder- i asked a ? in this thread about added pressure of mtpa-

i dont recall fmg building their operation from the start thinking 100-200 mtpa-only at the end was everyone saying those kind of figures-

i mean i happy about the way they are going its been a good stock to me and has made me and some members of my family very good money-but i am in it for the long haul-

i dont care if they do 100-200-300 mtpa-but i am always on the look out for the cost to produce those number-s

i cant remmember where-but i readed a article on the weekend saying-their next plan in the next couple of year's is to extend the berths at the port to hold 3 ships,1 more train line etc etc-so i reckon going by those things to do-3-4 years is better-but maybe fmg like to put high expectations on themselves as we have seen in the past

but either way i am happy if they take 5-10 years-as they have said they have the stuff to dig-while still looking in more reserve's

cost is the killer-if u want to compete with the big boy's--

i have always wanted to ask-maybe its to early to ask as they have only loaded or shipped 1-but just say everything goes to plan-do u guys thing they will just do iron ore or branch into something else to become bigger like the two big boy's?

Just a thought only--

Thanks

Nick--