Ferrexpo Share Discussion Threads

[jjhbev] 11/8/2016 15:49

IMO the DB target price is very realistic – with some very big caveats. (By the way if you watch the results presentation on the Fxpo website you will see the DB guy asks the first and final questions. He is a mature – i.e. not wet behind the ears – guy and seems to have a real world handle on things)

It is obvious that any share price target is dependent on the iron ore price. But I wonder whether there is an understanding of how that price risk has reduced because of the change in the pellet premium now that pellets are in shortfall post Samarco.

In the results for the first half the average price received per ton was $76. The average iron ore price over the period was $52 which implies that the pellet premium was around $24. As has been widely reported the premium was very low in the first quarter – as was the iron ore price – but rose throughout the second quarter and is now very strong (mid/upper $30s ??). The Fxpo CEO stated very clearly that it is the company’s intention to agree long term premium rates with their “high quality, crisis resistant customers”.

IF $35 can be negotiated it means that the financial results seen in the first half could be replicated on the back of an iron ore price of only $41 per ton .
IF longer term premium rate agreements can be achieved then Fxpo is not exposed to a drop in the iron ore price in the same way as other “non-pellet” suppliers.

Notwithstanding the current strength in the iron ore price (which when combined with the pellet premium implies a price for Fxpo of in excess of $90 per ton) the majority of experts continue to call for a large fall in the iron ore price in Q4 and continuing in 2017. On the back of this the expected results by analysts for Fxpo in 2017 will be lower than currently achieved which is why the forward p/e ratio is shown as something over 8x for next year. On Barclays Stockbrokers the forecasts shown are:-
2016 Profit £97.7m EPS 16.7p P/E 4.7x
2017 Profit £53.6m EPS 9.15p P/E 8.5X

Obviously this could be the case – but I think that this p/e number implies that Fxpo will be getting less $ per ton than in the first half of this year. In fact, as far as I can see the implied price received is around $67 per ton assuming costs in line with current costs. Well, if the pellet premium can be secured at $35 it means that the iron ore price would need to be around $32.
(It is worth noting that the actual EPS for the first half of 2016 was approx 10p. So, given the very strong start to the second half the 2016 forecast looks very conservative)

Many experts are calling for substantial drops in the iron ore price – as they have indeed been doing throughout the past several months when it has remained strong. But not everyone agrees:-


Personally I am assuming that there will be a price drop but:-
(a) I believe that the pellet premium should/will be sustained at a high level
(b) I believe that the cash Fxpo has, is currently generating and will generate even in a lower price market is more than enough to cover debt service obligations over the coming 18 months
(c) I believe that Debt/EBITDA and Debt/MCap ratios by the time of the full year results will be very low and will support a straightforward refinancing of the Bond due in 2018/2019 – if necessary
(d) IMO if the iron ore price remains above $50 over the next 6+ months we will see Fxpo undertake brownfield expansion as referred to by the CEO and CFO in the results presentation.

Any thoughts anyone?

[pbutterworth1] 11/8/2016 10:28

....looks like 75p for the time being....

[mreasygoing] 10/8/2016 16:57

Hopefully a nice consolidation around 80p will happen before pushing on towards 150p.

[duncan doughnut] 10/8/2016 13:22

D.Bank - Buy - target 115p

[muffster] 10/8/2016 12:02

Something big happening now. Auction and price jump

[3rd eye] 10/8/2016 10:33

Ferrexpo Plc 101.7% Potential Upside Indicated by Cantor Fitzgerald.........

hxxp://www.directorstalkinterviews.com/ferrexpo-plc-101-7-potential-upside-indicated-cantor-fitzgerald/412707584

Opened out........

Ferrexpo Plc with EPIC/TICKER LON:FXPO had its stock rating noted as ‘Reiterates217; with the recommendation being set at ‘BUY’ this morning by analysts at Cantor Fitzgerald. Ferrexpo Plc are listed in the Basic Materials sector within UK Main Market. Cantor Fitzgerald have set a target price of 117 GBX on its stock. This is indicating the analyst believes there is a potential upside of 101.7% from the opening price of 58 GBX. Over the last 30 and 90 trading days the company share price has increased 25.75 points and increased 22.25 points respectively.

Ferrexpo Plc LON:FXPO has a 50 day moving average of 37.68 GBX and the 200 Day Moving Average price is recorded at 30.80 GBX. The 52 week high for the stock is 71 GBX while the year low share price is currently 12.5 GBX. There are currently 594,125,512 shares in issue with the average daily volume traded being 934,610. Market capitalisation for LON:FXPO is £350,534,052 GBP.

Ferrexpo Plc is an iron ore pellet producer. The Company produces, develops and markets its principal product, iron ore pellets, for sale to the metallurgical industry. The Company’s operations are vertically integrated from iron ore mining through to iron ore concentrate, and pellet production and subsequent logistics. It operates approximately two mines and a processing plant near Kremenchug in Ukraine, and an interest in a port in Odessa, and sales.

[firtashia] 10/8/2016 08:13

Well, that's 650k traded already in the first 10 mins. More excitement to look forward to today.

[jm2009jm] 09/8/2016 23:35

thanks granto... i meant other than the price fxpo are getting for pellets recently, it was the surge i was interested in, cheers

[granto2] 09/8/2016 18:32

hxxp://219.238.233.84/uec/priceIndex.do?method=toIndexOre_zonghe_en

[jm2009jm] 09/8/2016 18:07

any info re why the strong climb this afternoon ? thanks

[mreasygoing] 09/8/2016 17:05

Another alias. Mick ?

[dunc1n bannanatyme] 09/8/2016 16:38

I bid you a good evening fellow fxpo'ers

[3rd eye] 09/8/2016 16:33

you been following me again MR Easy Going....... LOL.

[pbutterworth1] 09/8/2016 16:33

Maybe have a beer or fizzy this eve

[pbutterworth1] 09/8/2016 16:32

Good Duncs

[pbutterworth1] 09/8/2016 16:32

Notice share price adjustment upwards on close. Will open up all over again tomorrow

[dunc1n bannanatyme] 09/8/2016 16:31

Very tempted to sell into that rise -but didn't

[mreasygoing] 09/8/2016 16:29

I love the high volume to accompany the move.

[mreasygoing] 09/8/2016 16:28

Bloody hell. What a beauty.

[pbutterworth1] 09/8/2016 16:17

There will be an rns. Increase too big.

[pbutterworth1] 09/8/2016 16:16

I can only think its to do with cash flow and bank loans/debt refinancing, perhaps with that meetings results to be formalised shortly

[abcd1234] 09/8/2016 16:12

somethings pushing this today... any ideas??
(other than china / pellet buy price)

[pbutterworth1] 09/8/2016 16:08

Its off again. Looking at the charts there seems to be a sea of blue over the price - not sure where it will end

[dunc1n bannanatyme] 09/8/2016 15:55

Pausing for breath ....

[businessquotes] 09/8/2016 15:43

Why does this happen ? (quote unobtainable)