FMG - Fortescue Ltd

[agro]

Does anyone know what the forecast earnings and profits are for the next 5 years? Looking hindsight, FMG would have been a great buy a year ago, anyone care to estimate how high the SP could go?

i anticipate the day it reaches inline with the share price of BHP ($40)..

so long that FMG can meets its objectives:

ramp up of production,

continue consolidation in the iron ore sector,

increasing prices,

and win the numerous legal disputes it is involved with

(200bn deposit with CAZ, a second railway line) and provide also a dividend on top, i think $40 (over the next couple of years) would be a little conservative.. my tip is $20 by end of year provided a strong finish to the all ords

not to mention (i stand corrected) that their tennament size (size of BHP+RIOs combined), only a portion has been explored!

 

[CAB SAV]

I'm not in a rush to get into this yet.
Capex/mine fleet costs up and gets worse with bigger ramp up.
Cash at end March was $650 mill, probably will be well down under $50mill by end of year.
With costs rising, this is too thin cash wise.

 

[agro]

I'm not in a rush to get into this yet.
Capex/mine fleet costs up and gets worse with bigger ramp up.
Cash at end March was $650 mill, probably will be well down under $50mill by end of year.
With costs rising, this is too thin cash wise.

so you will eventually get into it i gather?

those costs are a drop in the ocean btw compared to the earnings

nevertheless, good to hear contrary opinions

 

[CAB SAV]

AGRO, will prob be in after next cap raising. At present they need to prove & maintain production (and should) and have promised to ramp up to 45mt by years end. Big costly task from 24mt to 45mt then 55mt up.
they needed dollars 06, 07 and I suspect 08. Nothing wrong with that, but price dips nicely after cap raising.
Assuming markets keep pooping themselves this year, could be few dollars cheaper.

 

[njc.corp]

what industry is not affected by huge cost these days-i pressume we are all talking about petrol/as thats the no1 topic these day's

from memory the best low cost industry would be the internet after the outlay cost have been sorted out

the demand would surely cover cost-compared to the rio story of the the argreed 85% price increase in iron ore-

as always have a good weekend and happy trading for next week guy&girls-

Thanks

Nick--

 

[agro]

AGRO, will prob be in after next cap raising. At present they need to prove & maintain production (and should) and have promised to ramp up to 45mt by years end. Big costly task from 24mt to 45mt then 55mt up.
they needed dollars 06, 07 and I suspect 08. Nothing wrong with that, but price dips nicely after cap raising.
Assuming markets keep pooping themselves this year, could be few dollars cheaper.

how do you come to these conclusions as if you are running the company? don't you think you are abit farfetched?

are you one of the fortescue accountants and do you think that the experts at FMG hasn't thought of all these sophisticated ideas that you are coming up?

ofcourse they need money to expand but not the way you are saying - once they expand the dividends will be bigger.

what counts is can they afford what they have in hand now - answer is yes and the expense will be paid for therefore what you are saying is invalid to apoint

i say no more

 

[CAB SAV]

AGRO, My point is that I am wary of companies with high debt, rapid cash burn and are a single mine company (heard any of that lately) As I previously said, next time there is an equity raising and price drops, I will look to invest.

 

[MRC & Co]

AGRO, My point is that I am wary of companies with high debt, rapid cash burn and are a single mine company (heard any of that lately) As I previously said, next time there is an equity raising and price drops, I will look to invest.

Sounds like common sense to me.

Quiet a few factors there of which could cause a black swan event for FMG.

But for the moment, on it marches, and excellent work by all the holders! While I personally had it undervalued (see further back in the thread), despite most F/A analysts saying it was fair value or above, the risk was a bit too much for me personally. Whilst I missed the trading set-ups which came up

Good luck!

 

[michael_selway]

AGRO, My point is that I am wary of companies with high debt, rapid cash burn and are a single mine company (heard any of that lately) As I previously said, next time there is an equity raising and price drops, I will look to invest.

Does FMG still have a lot of debt?

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -2.6 -3.2 38.2 88.8
DPS 0.0 0.0 0.0 0.0

Date: 27/6/2008
Author: Barry FitzGerald
Source: The Sydney Morning Herald --- Page: 25
Fortescue Metals CEO, Andrew Forrest, donated 2.38 million shares worth $A28.5million to charity in mid-2008. Forrest also donated his entire stake inPoseidon Nickel to the Australian Children's Trust, as the company preparedto resume mining at its Windarra nickel operation. Poseidon believes the minecould produce around 60,000 tonnes of nickel and has struck a deal withHarbinger Capital for the provision of $US50 million ($A52 million) inunsecured, convertible notes

Date: 25/6/2008
Author: Julie-Anne Sprague
Source: The Australian Financial Review --- Page: 1/68-69
Western Australia's booming Pilbara region is under threat in mid-2008, asbasic service providers can no longer afford to live there. A lack ofresidential property has driven a trebling of real estate prices in four years.Cleaners, retail assistants, hairdressers, teachers and supermarket workers areeither leaving Port Hedland and Karratha for cheaper towns, or taking uphigh-paying positions with the mining companies. Small businesses and bankbranches are closing in the middle of the day due to staff shortages. FortescueMetals Group states it has "enormous growth potential" in the region,but warns that its operations are under threat by the lack of local employmentand services. Fortescue pays substantial royalties to the local council but RioTinto and BHP Billiton do not, due to deals made decades ago. BHP contributes tocommunity amenities instead

Date: 19/6/2008
Author: Julie-Anne Sprague
Source: The Australian Financial Review --- Page: 12
Fortescue Metals Group has become the first company to partner with the WesternAustralian Department of Planning and Infrastructure's Licensing BusinessUnit. The initiative, which was launched by the State Government on 18 June2008, aims to increase indigenous employment levels by providing assistance forthose seeking a driver's licence. Fortescue CEO, Andrew Forrest, saidhaving a driver's licence is essential for those looking to work in thebooming mining sector. Forrest said the program will cost the company asix-figure sum, although he said the benefits will far outweigh the cost

thx

MS

 

[renim]

my un substantiated thoughts on fmg

a, EBITDA to be 3.4b (next year)
b, current large project was about 3b + funding costs.
c, EBITDA exclude capital repayment, includes interest.
d, earlier expenses were likely to be paid by equity.

equals this is actually a small to moderate debt company for its earnings.

one of the keys to Forrest's success was that he treated other peoples money with respect in anaconda. when it came to the crunch, he would've asked for a 2 year holiday on interest, whereas glencore asked for 25c in dollar or walk away.
the overseas capital that he accesses would remember that.

secondly on tv last year (or so) someone asked him if he would refinance as his project was progressing and his debt would not be so risky (therefore refinance at a lower rate). his reply was something to the effect that the lenders had supported him and now he wasn't going to refinance just because he could get it cheaper.

but it is still good to get contrarian thoughts on fmg, with the reasoning behind them.

 

[renim]

single mine yes, multi deposit yes, and multiyear life ok by JORC.
burn rate, was scary, but now into production , earning rate is scary.
hi debt, no, its not high debt when you consider either equity or earnings.

basically they got in at the right time.

oh yeah, forrest does mention dividends a bit. its been a long time between drinks.
i look forward to the drinks.

ramp to 50mtpa should be cheap, its already built and the mine costs are maybe 15% of this project.

 

[renim]

total debt 2.9 bill
long term debt 2.6 bill
total assets 1.9 bill
upcoming ebitda 3.4 bill

so there you have it, 'assets' are minute, debt is large and earnings are outta this world.

assets is a rear view mirror looking concept, and by that i would'nt touch fmg with a ten foot barge pole

ebitda is a forward looking concept, and its truly golden.

thats why analysts are divided
2 - strong buy
1 - buy
2 - hold
1 - sell
2 - strong sell

generally this is a sell, except its the buyers who have been laughing

 

[renim]

woolworths ebitda for 2007 was 2.7 billion, suppose it will increase 10% to 3 billion for 2008 etc.

that makes woolworths earnings very comparable to FMG,

except FMG has no history
and FMG has lots of upside (resonable to expect a quadruling in capacity to 200mtpa.) WOW will not increase earnings by 4, australia can't support that. (unless it merges with coles/wesfarmers, and doubles it margin) which is what WOW would need to do to match FMG's upside

current market caps of both companies are similar wow is 30.5b, fmg is 34b.

personally, it looks like that the market dos not yet factor in the upside for fmg. so in general it looks like fmg is fundamental undervalued compared to WOW on a forward looking basis.
it also looks that for present valuation only, FMG is neither high nor low compared to say WOW

 

[rodgerdp]

i anticipate the day it reaches inline with the share price of BHP ($40)..

so long that FMG can meets its objectives:

ramp up of production,

continue consolidation in the iron ore sector,

increasing prices,

and win the numerous legal disputes it is involved with

(200bn deposit with CAZ, a second railway line) and provide also a dividend on top, i think $40 (over the next couple of years) would be a little conservative.. my tip is $20 by end of year provided a strong finish to the all ords

not to mention (i stand corrected) that their tennament size (size of BHP+RIOs combined), only a portion has been explored!

My guess: if half of BHP's revenue comes from iron (which is a guess not based on much research), and FMG plans to produce the same quantity of iron as BHP, FMG's market cap could one day be about half of BHP's: $100B, which is share price of about $40.

 

[enigmatic]

Little hard to compare BHP and FMG right now. Both are based on future profits. FMG has one Iron ore plant starting up.

BHP Has well established Iron ore mines already producing more on the way.
an Oil and gas sector with huge developments in the pipeline.
Olympic Dam Expansion underway 10million ore capacity to 70million, and surely many other large projects future and current projects factored into there share price.

with a current Revenue of 39billion and profit of 13.7Billion in 2007 which I'm sure has increased with most prices.
I do not think we can expect FMG to just match BHP overall capacity over night.

Please note I'm a keen holder of both companies.
DYOR.. And thanks to everyone else.

 

[njc.corp]

Little hard to compare BHP and FMG right now. Both are based on future profits. FMG has one Iron ore plant starting up.

BHP Has well established Iron ore mines already producing more on the way.
an Oil and gas sector with huge developments in the pipeline.
Olympic Dam Expansion underway 10million ore capacity to 70million, and surely many other large projects future and current projects factored into there share price.

with a current Revenue of 39billion and profit of 13.7Billion in 2007 which I'm sure has increased with most prices.
I do not think we can expect FMG to just match BHP overall capacity over night.

Please note I'm a keen holder of both companies.
DYOR.. And thanks to everyone else.

some very good basic points-i dont think anyone is comparing bhp and rio-

people like me only use them as a example as they are the big two?

all fmg wants to do is split the pie a bit-

to the people that have been on fmg or watch it over the years--

what do u guys think it had a shae price once at $60+

Thanks

Nick--

 

[agro]

some very good basic points-i dont think anyone is comparing bhp and rio-

people like me only use them as a example as they are the big two?

all fmg wants to do is split the pie a bit-

to the people that have been on fmg or watch it over the years--

what do u guys think it had a shae price once at $60+

Thanks

Nick--

it was once $60 prior to a 10 for 1 share split

so in theory now it is $126.40..

but the 10:1 attracted more retail investors on board and are much willing to pay a lower price, with more liquidity and have more shares so to speak

 

[njc.corp]

it was once $60 prior to a 10 for 1 share split

so in theory now it is $126.40..

but the 10:1 attracted more retail investors on board and are much willing to pay a lower price, with more liquidity and have more shares so to speak

Thanks as always argo

lets see if we can have a good week or at least average something decent

it looks not bad this morning

happy trading to all

Thanks

Nick--

 

[gav]

does anybody know what todays announcement is? my commsec account is playing up, i can see my watchlist, depth, charts, etc. but when i click the little news symbol nothing loads

 

[njc.corp]

does anybody know what todays announcement is? my commsec account is playing up, i can see my watchlist, depth, charts, etc. but when i click the little news symbol nothing loads

Nothing-its the the may construction report-

thats all really

Hope that helps

Thanks

Nick--