I don’t mean to rain on your parade as I too believe FMG is...

I don’t mean to rain on your parade as I too believe FMG is trading very cheaply when looking at PE. A lot of the risk and negativity regarding price has been built in to the price. The guys that continually flog a dead horse at places like Marcobusiness need to find a new gig and realise FMG isn’t going to trade 2 or 3 x earnings.

Anyway, I just wanted to point out that your margin by the output gives you EBITDA and you’ll find FMGs NPAT has and will range between 0.45 and 0.55 of EBITDA.

Also, in looking at immediate forward PE remember we are probably looking at 127Mt this year and a realised price for full year of between $105 and $115 dmt.

Then you have the AUD/USD to factor in too.

Talking about ramping up though....a recent note for Shaw which suggests some mining optimisations to increase output.

? The Mar’14 quarterly production report showed production of 29.6Mt with FMG shipments of 30.8Mt. FMG reaffirmed its 127Mt guidance for FY’14 and stated it expected to ship 41.6Mt for the June 2014 quarter.
? FMG has formally completed its US$9.2bn expansion of port, rail and mining operations to achieve production capacity of 155Mtpa. The 40Mtpa Kings Valley project was opened in March 2014 following commissioning of the ore processing facility (OPF) which was constructed in record time, taking only 179 days from assembly of first steel to completion.
? Net Debt is US$7.7bn with gearing approaching 50%.
? FMG will now start to squeeze its operations and move production 10% higher for less than 2% added capital. Mine expansion at firetail is likely with the introduction of 2 wet concentrate plants. Rail capacity is being upgraded while the port could handle 200Mt with the 5th berth.
? We upgraded to a BUY and $6.70 price target