FMG 4.63% $17.32 fortescue ltd

Iron ore price, page-7407

  1. 2,519 Posts.
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    Thanks for sharing.

    I'm feeling that FY19 the margins are still going to be pretty bad (even worse than FY18) as the preference for high grade is seeming to persist. If revenue stagnates or declines further, it's not going to be a good feeling around here. It will throw up the PE and if you're not growing the share market will see it as failing.

    I know they want to mix in some higher grade ore for the second half, but who knows what that will receive in the market in terms of discount.

    I was long here and let it ride for longer than I should have. This feels like it could go sub $3 with high steel margins, environmental restrictions in China and unfortunately a comparably lower grade ore compared to what the Chinese are demanding (even though I know it's still overall good quality and a good product).

    I know they're slowly working to address this and may pop out with an acquisition or something, but I'm personally starting to realise how wrong management got it under Nev and subsequently to say the discount for grades as cyclical and not structural. Can the same people pull out an awesome eps accretive acquisition? It seems like they don't have their finger on the pulse. That was a great short trade to call out FMG management on that, shame I didn't stick to my convictions.
 
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$17.32
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1 4600 $17.31
 

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