Ferrexpo Share Discussion Threads

[telbap] 21/3/2017 16:35

DB.....the voice of reason!!.....yep you are right, just I added yesterday, used all my spare cash in sipp, even sold out some holdings that were redundant to top up here!... ce la vie, tomorrow should see us back up to recent highs and beyond.

[onedb1] 21/3/2017 15:43

Not really T . We had these conversations many times now . How often do we get these just above daily average true range drops ? Often ! Each time we get all the conspiracies out , and each time they are wrong and stock bounces up . Trend is UNCHANGED and it's trending upwards . We see ETFs moving stock prices too easily today because of their weight in the game .

[jpfd] 21/3/2017 15:43

Pound up, miners down

[telbap] 21/3/2017 15:00

Maybe a it more than a shake, very heavy drop off,

[pbutterworth1] 21/3/2017 13:34

very tempting to buy even more

[bellbottom] 21/3/2017 13:11

Found a few extra quid to buy some more on the dip this morning. Hope tomorrow is a pivotal day.

[onedb1] 21/3/2017 12:57

.... Just as I typed the post we get the 60 and 100k buys ... There you go. Big orders being filled.

[onedb1] 21/3/2017 12:54

Call me cynical but are they filling and order ? Buyer ? How can trades 30 , 90 or 400 shares keep on lowering the bid ? Sucking in the odd bigger seller as a result ? Can only be if an order is quietly being filled IMO . We shall see. Remember price was rising when Blackrock was selling. So as price is falling some big buyer is buying

[onedb1] 21/3/2017 12:42

Plus iron ore above $90 , last I checked $92.1 !! Insane and very high. Just needs to stay above $60 to produce great results so $90 is fantastic

[onedb1] 21/3/2017 12:38

Agree with both low volume and shake prior to results . Plays on private investors minds. Been doing this since the 70s. Yet some fall for it the whole time. Incredible to be honest.

[telbap] 21/3/2017 11:42

Probably just a shake out before results....they are due tomorrow right?

[telbap] 21/3/2017 11:40

I did say it will test160

[pbutterworth1] 21/3/2017 11:19

ps vol is indeed low, in other words share price movement is not material

[pbutterworth1] 21/3/2017 11:18

This idea won't be popular but as FXPO long the best idea is to actually sit back from the screen, enjoy the Spring and come back in 48 - 72 hours....

[onedb1] 21/3/2017 11:06

Could easily be an asset re allocation . All analysts covering Fxpo are seeing EPS up and cash reserves up with the rating agencies recently upgrading FXPO credit rating too.

If the manager in charge sees a faster opportunity else where or is forced to sell then its their own decision. I am not sure but they may even have internal rules on how much they are allowed exposure wise in each emerging market . We can't possibly know their reasoning. Given that Blackrock is an asset manager they have to abide by so many rules
What is more important is that the shares were actually bought up . Now that is bullish . There was no super spike and distribution in my view. In fact we are falling today post the selling which is funny ! On small volume today which suggests private investor usual paranoia

I look forward to the 2016 updates but even more so if we get a 2017 update too. As inevitably that is bullish . Chart wise much of the same. The bb here always gets worried when we lose a few pennies lol ! People should be used to this by now

Single digit P/E with good expectations on EPSs due to high Iron Ore prices easily push this eventually into the mid 200s and then more. Just add and sit back , the daily swings are the rule on FXPO . 2018 could be way higher too with debt worries disappearing .

As always stay on trend . Or simply don't do it and lose money

[gilesgraves] 21/3/2017 09:20

Me too - looking forward to it, a little like christmas but hopefully more lucrative! As far as Blackrock sell off is concerned i think it raises an important point. I think what may have happened is that Blackrock (and others) may have seen FXPO as a cash machine and sell off early (albeit at profit) in order to off set losses they have suffered in other stocks. I can't see any other reason for it. Even in that scenario I don't understand why they wouldn't wait until after the results...unless they are going to be doing some serious buying this afternoon / tomorrow. If that is the case and everyone piles back in today / tomorrow...it could be a very sharp rise indeed. Just a thought....

[telbap] 21/3/2017 08:26

Nope missed that, just focusing on the future, mainly the immediate one tomorrow.

[gilesgraves] 20/3/2017 21:52

Did you see the RNS o Friday? Ive only just seen it now. Blackrock were the ones responsible for the sell off.

[telbap] 20/3/2017 16:35

What a lovely close.

[telbap] 20/3/2017 15:40

Just bought another and my last, chunk. Roll on Wednesday ;-)

[telbap] 20/3/2017 15:07

JJ....excellent posts, Thankyou.

[jjhbev] 20/3/2017 11:46

This post focuses on Fxpo cash/ debt. In summary it is my very strong (restated) opinion that whilst there are many risks involved in investing in Fxpo debt service is no longer one of them.

As we know, Cash at the end of 2016 was $145m. I had originally expected cash to be over $150m based on market conditions through year end. I think/hope that a major reason why I was overestimating cash was that I hadn’t factored in that there would be a large increase in debtors.

Based on previous accounts the average debtor period given by Fxpo is slightly over 1 month of turnover. At midyear 2016 (when iron ore was around $55 - $60 per ton) the debtor figure was $66m. Assuming that the terms of trade have not changed then, because of the increases in prices/premiums, this figure will have increased at end Dec to say $100m. (n.b. this figure will have increased somewhat further based on the recent prices).

As regards current cash generation then IMO Fxpo will be generating something of the order of $60m per month (subject always to production/sales of 900+kt per month). When one takes into account the credit given by Fxpo to its customers and its monthly pricing policy then this level of cash generation will continue over the next two months even if prices were to suddenly fall off a cliff with immediate effect. IMO it “only” requires Iron ore to stay above $80 per ton until the end of April for cash of $60m a month to continue through the whole of H1 2017 – i.e. say $350+m.

Combine that H1 cash generation with the $145m from year end 2016 and you have approx $500m.

There are of course multiple uses for that cash:-
CapEx – both sustaining and any expansion (Estimate sustaining at $5m per month)
Interest Expense (Estimate an average of $5m per month)
Tax Payments (I am not sure about timings on these)

I think that the total of the above will be less than $100m over the half year.

And of course there are Debt Principal payments.

For 2017 the total payable is approx $200m
For 2018 the total payable is approx $330m (Incl $173m of expensive bond repayment)

So, by Mid Year 2017 it is my belief that Fxpo will have enough cash to fully cover all of this year’s debt payments PLUS the 2018 bond payment in full PLUS the other debt repayments due in Q1/H1 2018.

That leaves only $250m or so of debt outstanding. It is entirely possible that Fxpo could have zero net debt by the end of 2017 – that may sound crazy but it’s actually not that far fetched! It is also entirely possible that iron ore does drop back dramatically and/or things flare up in the East again but as things stand Standard & Poor and co really must upgrade Fxpo’s credit rating!

To conclude, one other “left field” item that could come into play could be the restoration of dividends. Unlikely but, particularly if they have negotiated any longer term sales/premiums contracts, not unjustified.

[jjhbev] 20/3/2017 11:42

Only a couple of days to results. What will they show - & how will the market react???

As regards the 2016FY results I guess we are all expecting good/very good figures.

To briefly recap, the figures for the first half were

Average Iron Ore Price $52 per ton (lousy first quarter)
Average Fxpo Price $76 per ton (lousy Q1 premiums)

EBITDA $160m
Net Prof $78m

For H2 we know costs increased versus H1 but that prices & premiums also increased. In fact Q3 was quite flat as compared with Q2 and it was only in Q4 that things changed dramatically (I will comment further on this in a separate post on cash v debt).

My estimates for H2 are for
EBITDA around $240m
Net Prof around $140m

Much will depend on what premium levels they achieved and how much costs (particularly energy & transport) have increased.

If the H2 Net Profit figure is correct then the 2016 full year figure is around £180m. This equates to a “backward looking” P/E multiple of 5.5X

IMO the current year figures for Fxpo will blow those figures out of the water. IMO Fxpo can well be generating EBITDA of $60m per mth (subject to production/sales of 900+kt per mth) and that this would equate to Net Profits of $40m++ per month.

If that is correct the results for just Jan & Feb – a Net Profit of approx $85m – would exceed the Net Profit for H1 2016. Also, the net profit for Q1 2017 would be close to the figure for H2 2016.

At present, no one is expecting the current level of Iron Ore pricing to be sustained – but if it were to be then Fxpo should/would warrant an share price well in excess of double its current level. I am not at all assuming that this will happen but :-
(a) I do believe that the debt concerns re Fxpo are no longer justified and hopefully this will become reflected in its P/E multiple
(b) Personally I believe that the Deutsche Bank target price is justified based on an Iron Ore price around $60 per ton. That’s just my opinion! (and not an unreasonable Iron ore price to look at).
(c) My opinions and that of the Market often differ!!!! ;-)

I will review all of the above on Wednesday!!!!!

Good luck all.

[bellbottom] 20/3/2017 08:37

Sorry, forgot to add capital H at beginning of weblink.