Fortescue – FY19 Earnings Result

Posted on | by Leon Hinde

Fortescue Metals Group is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.

The FY19 earnings result was solid with underlying EBITDA US$6b, the strong result helped to drive down net debt to US$2.1b which reflects a gearing ratio of 16%.

A final dividend of A$0.24 was declared, lifting the full-year payment to
A$1.14, translating to a yield of 16%.

Volatility in spot iron-ore prices continues to be a key driver of the share price.  Iron ore futures are now trading at their lowest price in more than six months.

Note: RIO at $83 is now on our watchlists and we suggest tracking the short-term indicators for a reversal higher.

FMG

RIO

Iron Ore – BHP, RIO & FMG

Posted on | by Leon Hinde

Spot iron ore prices have rallied in the past days on the news of a second catastrophic tailings dam failure at a Vale-owned mine in Brazil.

Exceptions of reduced supply impacting the market, has driven up short term spot prices. Although, Iron Ores prices have been on a steady climb since the November low.

Long-term Iron Ore price chart.

We remain cautious of a potential pullback in RIO, BHP and FMG following the run up in prices and Algo Engine sell conditions.

Our preference continues to be in the energy names with OSH and WPL our core exposures.

 

FMG Announces A $500 Million Buyback Plan

Posted on | by Leon Hinde

Overshadowed by the general market weakness, FMG has announced a $500 million on-market share buy back plan earlier this week.

Once completed it will be 4 – 5% earnings accretive by 2020.

Shares in FMG have risen over 6% since the announcement and we see the next significant price resistance level near the July 25th high at $4.60

 

Fortescue Metals Group

FMG Is A Buy Write Strategy

Posted on | by Leon Hinde

FMG is oversold relative to BHP and RIO.

Strong production numbers and improving low grade ore pricing discounts should flow through to better near-term share price performance.

We recommend adding a covered call option to enhance the cash flow.

The graph below displays the increase in Ore shipment from the Port Hedland port in WA.

FMG

 

Foretescue Is Nearing The Buy Zone

Posted on | by Todd | Leave a Comment on Foretescue Is Nearing The Buy Zone

Since posting a high of $5.03 on May 15th, shares of FMG have dropped almost 10%, reaching a low of $4.53 in early trade today.

Much of the weakness has been focused on the tepid demand for Iron Ore from China, as well as, the widening spread between the higher grade ore and the lower grades of ore.

However, as profit margins contract for Chinese steel mills, we will likely see this spread contract to the benefit of low grade producers like FMG.

FMG is the 3rd largest Iron Ore producer in the world and, as a low cost producer,  is still profitable even in the lower grade market.

The company is scheduled to pay a 25 cent dividend on September 1st, which is 5.5% of the current share price on a stand alone basis.

Fortescue

 

FMG Firms On Expanding Export Numbers

Posted on | by Todd | Leave a Comment on FMG Firms On Expanding Export Numbers

Pilbara Ports Authority released its April shipping figures for its ports in the Pilbara region, which delivered a total of 59.1 million tons for the month, a seven per cent year-over-year increase.

Iron ore exports from Port Hedland remained consistent, up 1 per cent from April 2017 figures to 42.6 million tons.

These better-than-expected export numbers helped lift FMG over 4% for the week to reach a 4-month high of $4.95.

FMG is part of our ASX Top 50 portfolio and we see the next near-term target in the $5.50 area.

Fortescue Metals Group