FMG 1.35% $18.24 fortescue ltd

fmg the lehman of the commodities bubble?, page-53

  1. 20,409 Posts.
    lightbulb Created with Sketch. 1991
    Margins , margins , margins
    Rough figures just for discussion , please don't attack them if they are a few dollars out - just painting what I think is a very simple picture
    fMG produce IO at a total cost of 85
    They sold it at 145 -150
    So a margin of 60-65
    iO now 88 but let's agree that this is a ST bleep . And lets say it recovers to 110
    Margin 25 dollars
    Now after the decrease in capex , labour etc , this lower margin needs to pay debt and justify enough of a revenue multiple to support and certain SP - the simple fact is if IO settles anywhere below 120 FMG is worth a lot less than it is being valued today - my view only
 
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