buy buy buy, page-2

Was chatting to a fellow shareholder this morning. We read the order book like this:

325M as of July (from the prelim ann rpt)
200M for Fortescue (announced Aug 30)
= 525M

plus

their share - 50% - of the Roy Hill Iron Ore Project announced on Aug 24, which one contributor reckons is worth 500M in total. Will wait and see. I believe they've got the early contractor role, but have to bid for the construction part?

Given its only September, and those announcements (incl that some of the revenue will fall into next FY), you'd reckon 550M revenue is a distinct possibility, and when you apply a conservative profit margin to it (they achieved 12% in 2010, 9% this year) of between 8 and 10%, you get a range of possibilities that are indeed promising: 53 to 66 cents per share earnings.

Of course there are some risks. The Solomon Hub project has had some legal action decided in FMG's favour by the Federal Court of Appeal, I believe, related to compensation for the original owners of the land. Not sure if the claimants will take it to the High Court. Some risk of delay there if they do.

I also take on board another contributors concern re margin decline due to Clough's involvement, but I'm in no position to judge.

Good things can happen holding a company like Forge.