Most are expecting the RBA to lower interest rates next month...

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07/01/20

23:45

Post #: 42273208
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Originally posted by defabs ↑

The AUD is starting to retrace again hitting 0.689 before. (I believe it will be subdued for a long period of time as per previous posts) I’ll have a look at the HY profit forecast again. I can see the thread has been active again in the last couple of days.

The dollar peaking at 0.70 right on 31 Dec will lower the AUD profit for the HY...But unless FMG converted the USD to AUD at this time to put aside the AUD funds for div payment or entered into forward contract, the dividend we receive will likely be at the mercy of the FX markets until around the time of reporting date.

What I mean is say FMG make US$70 profit and AUD/USD at 31 Dec is 0.70

This equates to A$100 profit

If payout ratio is 50%, then dividend is A$50 (if AUD remains at 0.70 at div declaration date)

If AUD drops to 0.66 at the time of reporting date, then they will still payout 50% of USD70 profit, which is USD 35

However, AUD dividend would be A$53, which would still be 50% dividend of USD profit of 70.

The AUD dividend would be $3 or 6% higher as a result of the AUD drop.

It would not affect its financials which are denominated in USD currency

I’m only speculating that FMG haven’t hedged already. They may have an idea what USD they will be paying out already but the AUD will be determined by the currency at reporting date. A lower AUD will hekp

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Most are expecting the RBA to lower interest rates next month and that would include me.

They would take into account the impact of fires as well and what they will do to the price of food. I would anticipated that the
cost of meat fruit and vegetables will rise at the same time they will be mindful of the re build costs post fires.

High prices of less available food may not see empty shelves because quite a few essentials of life had an increase on
1 January and Melbourne's summer is slow to start and many minds are not turning to shopping other than return to
school costs and I for one pay rates about this time of year.

A lower interest rate surely would drive people to yield assets. At least that's what todays after market buyer may have
been thinking. As have other large recent buyers thought in recent after market trades.
We would have to be one of the best yield share on the ASX and fully franked.

A pull back on the daily price doesn't worry me when the weekly chart looks so good. We remain in a perfect uptrend and
I'm prepared to let the trend be my friend.

FMG Price at posting: $10.69 Sentiment: Buy Disclosure: Held
3 Upvote

2 Great analysis

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