China demands iron ore but, likes high better quality than the junk fmg has on offer. Fmg has massive outstanding debt. Why would you purchase an inferior product when you can have premium iron ore from BHP. The quantity of assets will not be realised the share price unless they have a market.
EXAMPLE
Santos has massive amounts of gass yet no market in australia and therefore its share price does not represent its true value. Santos could be valued over $100 per share in the as a long term. In australia gass contracts are filled which means santos can not add value to the company with its gass assets. The only way it can, is by tapping offshore markets.
PARALLEL WITH FMG
The iron ore market in china will be fully supplied by bhp and rio, this will leave fmg out in the cold. The same effect as the gass market in australia.
target price of 50 cents
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