Fair Value For FMG, page-2

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sam0408

2,181 Posts.

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19/08/21

17:02

Post #: 55421828
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Originally posted by Superheat: ↑

Would someone much smarter than I am, please provide a guide on what the FV of FMG is at Iron Ore Prices of low ball $120. This would give me a base case scenario on the possible share price. I sold out at 25 as I have been expecting issues with iron ore due to internal issues in China. Now I wonder at what price I can buy back in as a long term hold for the dividend stream. Even at the worst case $80 that some analysts predict the long term price will be, FMG is making a ton of money. The 120 figure has no scientific backing, purely gut feel and happy to be corrected.

I have read analyst reports but they have been wrong on FMG and iron ore prices every step of the way for the last 2 years. I think astute Hotcopper posters would be better value.

As Vale comes back on stream, one would expect the days of nose bleed ore prices to be over. I am optimistic on the long term future of FMG as they transition to higher grades, as that would insulate them somewhat from falling iron ore prices.

Iron Ore is intrinsically linked to construction in China. As the government has tightened up on loose lending, this will invariably suffer. In addition steel output has been curbed to control pollution and I see that in escalating steel prices there. I deal with specialized steel products and get parts made in China.
These are just a few interesting snippets on the internal issues there.
Evergrande
This is the No. 2 property group and is deep in debt to the tune of $100 billion. The head Hui Ka Yan, once China's richest man is being hounded and has recently resigned from his post. They have 427 legal cases ongoing for various issues like non-payment etc.
Huarong
This is the largest of the 4 "Bad Banks" set up 20 years back to absorb the bad debts of banks so they could clean up their balance sheets. It is now deep in debt itself, with a massive loss for the year and a government bailout. The head, Lai Xiamin, was executed in January this year for financial crimes as he ran it like a private plaything.
Dalian Wanda
Wang Jianlin headed this empire. He was another superstar buying things around the world on easy money from his connections. Covid put an end to him as revenues from shopping centers, theaters etc crashed. Now he is deep in debt, on the nose and flogging stuff to stay afloat.

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Hi Superheat,

At US$120/t last year (Sep-Nov) FMG traded at $16 - $17.

Post ex-div date next month looks like $18 so could easily get down there under your IO price scenario.

FMG Price at posting: $20.13 Sentiment: None Disclosure: Not Held
3 Upvote

0 Great analysis

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(20min delay)
Last $22.62		Change 0.700(3.19%)		Mkt cap ! $69.64B

Open	High	Low	Value	Volume
$22.38	$22.75	$22.26	$131.3M	5.814M

Buyers (Bids)

No.	Vol.	Price($)
1	120	$22.62

Sellers (Offers)

Price($)	Vol.	No.
$22.63	6416	3

View Market Depth

No.	Vol.	Price($)
1	120	22.620
1	100	22.610
3	18022	22.600
3	11342	22.590
1	6442	22.580

Price($)	Vol.	No.
22.630	400	1
22.650	14480	2
22.670	5076	2
22.680	1200	2
22.690	300	1

Last trade - 16.10pm 04/07/2024 (20 minute delay)

FMG (ASX) Chart

Fair Value For FMG, page-2

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Fair Value For FMG, page-2

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