Ferrexpo Share Discussion Threads

[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.

[bellbottom] 20/3/2017 08:36

Missed this from Friday - PGOK, 99% owned by FXPO.

hxxp://metalukraine.com/2017/03/17/ukraine-pgok-losses-down-in-2016.html

[gilesgraves] 20/3/2017 07:35

Im not doubting the uptrend. I haven't doubted it since 70p!

[muffster] 19/3/2017 22:13

I agree with telbap. Giles there will be wild swings but uptrend still in force

[telbap] 19/3/2017 18:07

Giles....it goes without saying that news flow and iron ore prices can affect the sp, above pattern is just my thoughts based in previous patterns.

[gilesgraves] 19/3/2017 09:44

Different posters are saying different things. All looking at the same charts. One poster said : 166 then up to 186 then up to 201. Another poster said Charts are looking for 175 then retrace to 155-160, then on to 225. Now you Telbap you are saying 195 then another pullback to 160 then back up through 210 - 220. How can you all be looking at the same information and coming up with such different results? Also, this doesn't account for daily news, ore price change, daily candles, and most importantly the decisions made by big players. It doesn't matter what the chart says if a big holder decides to start selling. This is how we get caught out with drops like earlier this month. We are all looking up and a big holder decides to sell. We need to be more nimble and pay more attention to changes in patterns if we are going to make the most out of this stock and not be taken for a ride by bigger players.

[telbap] 17/3/2017 22:01

Evening all....looking at the chart, going over the waves we have seen ris I ng through 50p to 175, I would say we will get to 195, then another pull back, to about 160, then back up through 210 - 220. If we catch it right an excellent trading play.All imho, door etc etc.

[gilesgraves] 17/3/2017 16:39

I think deutsche bank are behind the recent sell off we went through. Just after their 230 announcement the selling started. I think they announce these targets to keep mugs like us invested in a share and hopeful as they do the selling they need to....

[bent banana] 17/3/2017 15:54

Deutsche new target price 280 pence

[bellbottom] 17/3/2017 09:08

General Ukraine news - With current news on a possible further Scottish referendum, the Crimea situation makes an interesting juxtaposition. Not sure how 'fair' their referendum was but if you believe the data then 98% of Crimeans (who voted) want to be part of Russia. Not clear on US stance, when Trump previously stated his support for Crimea being part of Russia. Not a clear cut situation by any means. Interesting that all comments are anti US/pro Russian?



EU financial aid package to Ukraine - with the usual stated conditions. I note that they are predicting a 2% shrink in economy due to ongoing blockade.



A few good articles on general situation in Ukraine. Worth a read.



Looks like the usual FXPO Friday drop off. Maybe a few latecomers to the party can get in at a reasonable price today - or those who played the trading game and got caught out with last two days jump in share price

Also, with the regular huge swings in the SP, I wouldn't be surprised if this drops off this morning and recovers into the blue this afternoon. Too risky a strategy for me - I remain long.

[mark_jm] 16/3/2017 20:42

Ive seen this bus journey before, but sadly only as a pedestrian last time round, watched the Sp fall to <50p in 2008 accompanied by an ore price of around $60, then watched it rise to nearly 500 I think it was in 2011 as the ore price reached $180.

This looks like a repeat journey with very tight correlation to the ore price, the share price can almost be predicted based on what the outlook for the Ore price is, not withstanding Geo politicals of course.

I got back on the bus when the ticket to ride was 55p, watched it get discounted for a few difficult months, but reaping rewards now. looking forward to 230 p as per most broker share price forecasts in next few months.

[discodave4] 16/3/2017 19:12

Double drat and b&@@#$¥s.............I hate FXPO! :)

[onedb1] 16/3/2017 11:59

Hi BB,I am away from my desk till tonight but will look to see what the swings could be . As you know am a trend trader with the odd swing trade ( to generate more alpha if possible in both trending and non trending periods ) But a pure swing trader would know better than me as am still a long way to be very consistent with that strategy .I'll see if there is an over head minor trendline / diagonal. But the earlier chartist did show the clear trend channel. That is a decent guidance IMO SO Roughly speaking we have seen FXPO bouncing off them all the time . I will post a link to my view tonight . For now trend is up and that is what I follow . Targets are subjective from my testing. What will make me change my mind is a trend change or momentum change