Macrobusiness update today:
Ramping up = ramping down on earnings
BHP & RIO earnings estimates for CY 15 would be -16% and -3% respectively.
FMG also suffering which is acknowledged to be balanced and fair
Extract follows:
From UBS, which has an average price forecast of $66 for iron ore this year versus today’s $62.45, leading to the following damage:
All else equal, our BHP & RIO earnings estimates for CY 15 would be -16% and -3% respectively under a spot scenario. Nevertheless, RIO would trade on cheaper spot multiples at 11.9x CY 15E PE vs BHP at 18.0x CY 15E. Iron ore: The spot iron ore price is 6% below our CY 15 forecast, and implies a 29% downgrade to FMG’s FY 15E earnings.
The new and much celebrated margin expansion begins its inevitable erosion. Not that anyone cares right now as stocks launch on the RBA liquidity pump.
iron ore price, page-1573
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$18.31 |
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