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10/6/2021
15:13 | bozzy_s: Pleased with how the iron ore price has stabilized at $300 per tonne of pellets, vs a very healthy $225 at the start of 2021.
FXPO cashflow absolutely mind-blowing.
Reckon the next impetus for the share price will be interim dividend announcement (was 15th June last year), H1 results with 2nd interim dividend (was 5th August last year), then 3rd (special) interim dividend (was 11th September last year).
So lots of payouts to look forward to, after getting our FY 2020 dividend on 1st July.
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27/5/2021
07:58 | 1knocker: I see the case for a £12 valuation, but do not think we shall see an share price anything like that.This is Ukrainian, and there is that major shareholder, who is persona non grata with the govt ....
I think that sometime before the year end we shall get another sub 400, perhaps substantially sub 400 entry point. I can't provide a mathematical reason for that, it is just the nature of the beast.
FXPO is now my second largest holding, and all paid for by trading in and out and dividends. Ad ideal stock if you are disciplined and patient. Given the risks, I like to see the profit paid out in dividends rather than reinvested in the business or accumulated.
Rather than buy more at these prices, I have been accumulating Diversified Gas (the former DGOC). It too pays a stinking and rising dividend, and seems to me to be inexpensive. I think of it as FXPO without the Swiss withholding tax!
With markets so high, and propped up by crazy amounts of QE, the income element of my portfolio (of which FXPO, Diversified Gas, and a chunk of BAT are the cornerstone)is very reassuring. I prefer to be hosed with money than to have paper profits which only become certain when I sell.
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15/5/2021
01:24 | bozzy_s: Interesting links above. Thanks everyone for sharing them.
I haven't seen Simply Wall Street before. On their front page for FXPO they have a 'snowflake analysis' which grades the company on it's health, dividend, value, past and future.
FXPO seems to be top-notch for health and past. Scores very highly for dividend, highly for value, and very poorly for future.
The site's as useless as the brokers covering FXPO. 50 years of JORC'd reserves not enough?
Https://simplywall.st/stocks/gb/materials/lse-fxpo/ferrexpo-shares
As for 2021 forecasts, here's where I'm at currently:
YTD average 65% pellet price is now $254.45. So the average is still going up nicely while the price is $300.
Production is currently 0.9m tonnes / month, rising to 1.05-1.1m from ~July.
So H1 revenue will be higher than $254.45 * 5.4 million = $1.374bn.
For H2 let's assume the iron ore price returns to earth, 25% down on today's price, at $225. And the pelletiser upgrades are completed on time. H2 revenue = $225 * 6.3m = $1.417bn.
For a very conservative 2021 total of $2.792bn.
Simply Wall Street has revenue of $2.05bn.
Let's see who's closer next March ;)
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07/5/2021
23:37 | bozzy_s: Wowsers. Through the $300 a tonne level. Cost of production $41.50 per tonne. 12m tonnes production this year and 13m tonnes next year. $3.44bn profit before tax, interest, depreciation, overheads next year at those prices.
DJStevens welcome to this bulletin board. It's one of the more civilized ones on ADVFN!
I spent hundreds and hundreds of hours finding the right shares to invest in. FXPO is an undervalued gem. The share price has had a good run, but it hasn't actually kept up with FXPO's profitability.
The shares are ridiculously cheap on all metrics. P/E ratio (around 2 at today's pellet price). Dividend yield (surely we're not far away from £1 a year).
When the residual debt is paid off I'd expect further dividend raises, and the possibility of FXPO buying back shares in the market.
There are of course risks with any investment. I'd recommend reading bellbottom's posts on this forum.
My summary of positives and negatives would be:
Positive
Ultra low P/E ratio
4-6 dividend payments per year, increasing in value (2020-21 tax year 3.3c, 3.3c, 6.6c, 6.6c, 6.6c, 13.2c) (2021-22 so far 39.6c, 13.2c)
Net cash position recently achieved
Ridiculous profit margin and cash flow
50+ years of JORC'd mine reserves
Company engages with shareholders and has dealt with governance issues
Premium listing on LSE since 2007
FTSE4Good listing since 2017 (The FTSE4Good Index measures the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices)
Pioneering environmentally-focused company using autonomous haul trucks, and building a solar power plant on site
Potentially at beginning of a commodity super-cycle where prices will stay high, or go higher
Negative
Swiss witholding tax 35% is taken off dividends
50.3% shareholder, former CEO, wanted by Ukraine authorities for alleged dodgy business dealings
Related party transactions and some dodgy dealings with a charity and football club in Ukraine
(immaterial amounts of money compared with FXPO's cashflow)
Fair value somewhere between £10 and £15 per share? If this potential commodity super-cycle happens, the sky's the limit. £40 a share anyone? !!!!! Would be about 20x 2022 earnings ;)
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09/4/2021
00:28 | bozzy_s: Thanks XAMF. Credit to Denziiil for highlighting the cost per tonne of pellets, which I'd originally failed to account for.
Thags that's the approx pre-tax profit for Q1. I'm not sure what the tax figure will be. Probably a higher percentage than 2020 (15% of operating profit), and 2019 (12.2%).
It is pure guesswork, but let's say 20% tax. Hopefully a bit lower in reality.
That would give a net profit, after tax, of $313m for Q1. EPS of 53c / 38p.
The pellet price is currently $22 higher than Q1 average.
It's exciting to predict Q2, and especially Q3 and Q4 results (when production will be increased to 13m tonnes/year)...
Q2 same production as Q1 at average price of $262:
Revenue $711,068,000. Pre-tax profit $425,787,000.
Q3 at increased production of 3.25m tonnes @ $262:
Revenue $851,500,000. Pre-tax profit $509,878,000.
Q4 same as Q3:
Revenue $851,500,000. Pre-tax profit $509,878,000.
That would give annual results of:
Revenue $3,067,531,000
Operating Profit (pre tax) $1,836,837,563
Profit after tax @ say 20% $1,469,470,050
EPS (pre tax) $3.12 / £2.26
EPS (after tax) $2.50 / £1.81
Annual earnings of £1.81 per share, after tax, if nothing changes from here. I'll be reinvesting my dividend on 15th April :)
It feels the market has priced in about a 75% fall in iron ore prices for FXPO !!! I feel it's very very wrong. Valuing FXPO on a P/E of 2 at current prices, and possibly a P/E of 1.5 for next year, is nuts. Best value share in London. That's before taking into account a 15% and fast-rising dividend. Might be paying dividends of £1 per share in a couple of years.
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25/3/2021
22:53 | bozzy_s: My diary for reclaiming Swiss Withholding Tax for the year 2020.
25/3/21
Make a note of dividend payment dates to send to ii - 17/1, 14/5, 2/7, 3/7, 26/8, 8/10 - six FXPO dividends in the year! Request Swiss tax vouchers for these.
Make a note of my tax office postal address and my tax number/reference. Will need to send Swiss tax vouchers here.
Download Swiss form 86 from their tax office website. Try to find program to open .qdf document. Download snapform viewer.
Https://www.estv.admin.ch/estv/en/home/verrechnungssteuer/verrechnungssteuer/dienstleistungen/ausland.html
Https://www.snapform.com/en/downloads
26/3/21
Reply from ii confirming they'll post my tax vouchers in the next 2 weeks
6/5/21
Tax vouchers arrived in the post with ii company seal embossed on each one
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23/3/2021
11:23 | kenmitch: No Tygarreg. It’s the day you buy that counts and not the settlement date. Also for any who don’t know, ex dividend date is almost without exception on Thursday.
btw .....for any keen on big dividend paying mining shares, note that sector bellwether Rio Tinto has fallen from recent £65 to just £54 today. At the current price the dividend is nearing 10% and there could, as with FXPO, be further increases and specials ahead too.
It’s too late for Rio’s latest whopper dividend, but the good news is that the share has since fallen far more than that dividend making it better to buy now and miss out on that dividend. And the share price fall itself has increased the already exceptional dividend yield for a top FTSE100 share.
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23/3/2021
10:09 | kenmitch: Yes. And if you buy tomorrow. The share price will be marked down by the dividend amount first thing Thursday. Anyone buying on Thursday will not get the dividend. Anyone selling on Thursday and any time after that will get the dividend even though they've sold out.
Also on Thursday, though the share will be marked down by the dividend amount, what happens during Thursday depends as usual on selling and buying. If there is a lot of buying on Trursday, or sector itself having a good day, the share will recover perhaps a lot of that ex dividend markdown. But if it’s a down day generally, and there’s a lot of selling, then the share will fall by more than the dividend deduction. For fans of FXPO that could provide another good buy or top up opportunity.
btw...the falls today are sector wide and not specific to FXPO.
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22/3/2021
17:20 | bellbottom: Reply from Hargreaves Lansdown regarding SWT in an ISA. Just to be clear. I don't have any fxpo shares in my ISA only in a SIPP, so doesn't directly affect me.
"I can confirm that for holdings held within the ISA, you are able to submit a withholding tax reclaim on the dividends earned.
Hargreaves Lansdown does not reclaim withholding tax on any client accounts as we don't have the facility to process individual withholding tax reclaims for clients. This process will need to be undertaken individually by yourself with the Swiss Tax Authority. As we are not involved in the process I am unable to confirm the procedure that the Swiss Tax Authority require to successfully reclaim withholding tax.
However should you wish to make a claim, we can provide you with a Dividend Tax Voucher which confirms your dividend earned and the withholding tax paid to submit with your claim. If you require a dividend tax voucher please reply to this email with the dividend details your require.
From initial reading of the attached link Https://www.mazars.ch/Home/Insights/Newsletters/Swiss-Tax-Newsletter/Swiss-Tax-e-newsletter-October-2020/Withholding-tax-reform
It seems to suggest that reclaiming Swiss withholding tax will be harder for non-Swiss residents, however this will depend on your individual status."
BB
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22/3/2021
01:37 | bozzy_s: A new thread to discuss Swiss registered, Ukraine based, UK listed, iron ore pellet company Ferrexpo. The 3rd largest exporter of iron ore pellets in the world. LSE main market premium listing. A member of FTSE 250 and FTSE4Good indexes.
In time I hope to make this thread a treasure trove of information for us retail investors. Hopefully the excellent contributors to the obsolete thread will come here to share their research and knowledge.
Swiss Withholding Tax on dividends
Having announced a special dividend of 39.6 US cents, FXPO is now the highest yielding company in the FTSE 350. Most likely it's the highest yielding company, on an ongoing basis, in all of the AIM and FTSE markets.
This has brought the deduction of 35% Swiss Withholding Tax to the front of our minds. Here are some potential solutions:
1) From user Tygarreg. Sell before ex-div date. Buy back afterwards.
Sell shares just before ex-dividend date and buy back on or soon after ex-dividend date. In theory the share price should fall by the dividend amount. If shares are re-purchased within 30 days, then Capital Gains Tax (CGT) calculations will be based on the repurchase price rather than the original price. For example:
You have 10,000 FXPO shares, bought at an average 150p each (well done!)
FXPO announces a dividend of 39.6c per share (approx 28.6p), for shareholders on the register at 4.30pm on 26th March. This means the ex-div date is 25th March (FYI ex-div date is always a Thursday for London companies)
You sell 10,000 shares at 400p on 22nd March. You don't buy back before 25th March, so you're not eligible for the dividend. You buy back on 26th March for 371.4p. The share price has dropped by exactly the dividend amount (!)
You now have 10,770 FXPO shares and zero cash from dividends
As you've bought back within 30 days, your CGT liability is small. The 10,000 shares you sold are deemed to have cost 371.4p, rather than the original 150p. If you bought back after more than 30 days, then the cost would've been 150p, and you'd have a large CGT liability
Let's see what would happen if you held for the dividend, and re-invested it in FXPO shares...
You'd receive 10,000 x 28.6p x 65% = £1859. The Swiss tax authorities keep £1001
You buy £1859 worth of FXPO shares at 371.4p. Exactly 500 shares. So you end up holding 10,500 shares, compared with 10,770
This assumes all things being equal; the share price dropping by exactly the dividend amount on ex-dividend day, and the share price not changing before example 2 receives their dividend on 15th April.
2) Reclaim 4/7ths of the Swiss Withholding Tax from Swiss tax office
For UK residents. This is from FXPO's dividend letter dated July 2019.
“The current double tax treaty between the United Kingdom and Switzerland may entitle you to a certain reclaim of Swiss Withholding Tax on the dividend. Qualifying UK resident shareholders will be able to claim back 4/7ths of the 35 per cent Swiss Withholding Tax”
“Three copies of Swiss tax Form 86, duly completed and signed, must be sent to the to the tax office in the United Kingdom to whom your income tax return is made (or to the tax office for the district in which you reside, if you have not made such a return). The tax office has to certify the forms and the claimant shall subsequently send the first two copies of the claim to the Federal Tax Administration of Switzerland, Eigerstrasse 65, CH 3003 Berne, Switzerland, no later than 31 December of the third year following the calendar year in which the dividend became due. Rights to repayment arising in one calendar year must be claimed in a single claim. The relevant Form 86 can be found or ordered on the homepage of the Swiss Federal Tax Administration Https://www.estv.admin.ch/estv/en/home/verrechnungssteuer/verrechnungssteuer/dienstleistungen/ausland.html
“The claim must be accompanied by evidence of deduction of Swiss Withholding Tax. In general, a certificate of deduction, signed bank voucher or credit slip will satisfy this requirement. A dividend voucher will be provided at the time of payment. However, the Swiss administration reserves the right to request further evidence and information. Dividend statements issued by financial institutions outside of Switzerland must be accompanied by an additional Tax Voucher for a valid claim of refund of Swiss Withholding Tax. The Tax Voucher has to be provided by the financial institution.”
Regarding the above I contacted my broker ii, and they will forward the Swiss tax vouchers to me:
“Unfortunately, as we are execution only, we are unable to offer tax advice so cannot confirm what the process would be however, I do know that for Swiss withholding reclaims we can provide a Swiss tax voucher with which to help with your claim. If you let us know which dividends you are attempting to reclaim the tax on we will send you the relevant tax vouchers.”
3) Reclaim 4/7ths of the Swiss Withholding Tax on Self Assessment Tax Return
It has been mentioned on the old thread that you can reclaim the withholding tax on your Self Assessment tax return. Can someone advise the relevant section to complete?
I can see on the first Income page 'Foreign dividends (up to £300)' and 'Tax taken off foreign dividends'. But that's only for up to £300. And in the one year I included this (2018-19, foreign dividend £34, tax taken off foreign dividend £18) I wasn't given any credit in my tax calculation.
Anyone going through the 4/7ths reclaim process, please keep us all updated. Has anyone been able to open the form 86 .qdf file from the Swiss tax website?
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PLUS1
