SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.</strong>&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
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<h2>Fortress Minerals Ltd</h2>
<h3>Strong iron-ore prices</h3>
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<ul>
<li>1QFY22 PATMI beat, at 30% of our FY22e forecast as ASPs were higher than expected. Revenue was up 144% YoY, PATMI up 234% YoY.</li>
<li>1QFY22 sales volume increased 61.6% YoY. Last year, mining was halted in 1QFY21 by movement controls, for 1.5 months. PATMI more than doubled YoY from higher selling prices and gross margins.</li>
<li>Maintain BUY with a higher TP of S$0.81, up from S$0.64. We raise FY22e PATMI by 41%, factoring in stronger iron-ore prices. We raise ASPs by 37% to US$140/DMT. Our TP remains pegged to the industry average, which is now 10x FY22e PE, down from 11x previously. Catalysts are expected from an increase in production and strong iron-ore prices.</li>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/227/182/original/image_226223292171630445072201.png?1630445075" class="editor-image img-responsive" data-smartkarma-image-id="227182"></figure>
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<p><strong>The Positives</strong></p>
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<ul>
<li>Steady increase in volume. Iron-ore concentrates sold increased 61.6% YoY in 1QFY22. This lifted revenue by 143.8%. QoQ, volume sold and revenue were down 19.2% and 0.3% respectively, mainly due to seasonality.</li>
<li>Spike in margins. Gross profits almost tripled from US$5.0mn in 1QFY21 to US$13.9mn, with gross profit margins up from 71.1% to 80.5%. This was achieved with higher realised ASPs for iron-ore concentrates, which went from US$94.97/DMT in 1QFY21 to US$143.00/DMT. Unit costs climbed from US$24.88/WMT to US$25.55/WMT, mainly due to RM strength against the US$.</li>
<li>Operating cash flow increased. Operating cash flow catapulted from US$1.6mn in 1QFY21 to US$9.3mn in 1QFY22, with the help of higher profits before tax. FCF also increased from US$1.4mn in to US$9.2mn.</li>
</ul>
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<p><strong>The Negative</strong></p>
<ul>
<li>From net cash to net debt. Bank borrowings increased to US$22.8m for financing its acquisition of Fortress Mengapur in January 2021. From net cash of US$9.4mn in 1QFY21, the company booked net debt of US$10mn in 1QFY22. Still, we are expecting a net-cash position for the full year of FY22e, on the back of higher cash from higher net profit on a full-year basis.</li>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.




Fortress Minerals Ltd
Strong iron-ore prices





1QFY22 PATMI beat, at 30% of our FY22e forecast as ASPs were higher than expected. Revenue was up 144% YoY, PATMI up 234% YoY.
1QFY22 sales volume increased 61.6% YoY. Last year, mining was halted in 1QFY21 by movement controls, for 1.5 months. PATMI more than doubled YoY from higher selling prices and gross margins.
Maintain BUY with a higher TP of S$0.81, up from S$0.64. We raise FY22e PATMI by 41%, factoring in stronger iron-ore prices. We raise ASPs by 37% to US$140/DMT. Our TP remains pegged to the industry average, which is now 10x FY22e PE, down from 11x previously. Catalysts are expected from an increase in production and strong iron-ore prices.







The Positives





Steady increase in volume. Iron-ore concentrates sold increased 61.6% YoY in 1QFY22. This lifted revenue by 143.8%. QoQ, volume sold and revenue were down 19.2% and 0.3% respectively, mainly due to seasonality.
Spike in margins. Gross profits almost tripled from US$5.0mn in 1QFY21 to US$13.9mn, with gross profit margins up from 71.1% to 80.5%. This was achieved with higher realised ASPs for iron-ore concentrates, which went from US$94.97/DMT in 1QFY21 to US$143.00/DMT. Unit costs climbed from US$24.88/WMT to US$25.55/WMT, mainly due to RM strength against the US$.
Operating cash flow increased. Operating cash flow catapulted from US$1.6mn in 1QFY21 to US$9.3mn in 1QFY22, with the help of higher profits before tax. FCF also increased from US$1.4mn in to US$9.2mn.





The Negative

From net cash to net debt. Bank borrowings increased to US$22.8m for financing its acquisition of Fortress Mengapur in January 2021. From net cash of US$9.4mn in 1QFY21, the company booked net debt of US$10mn in 1QFY22. Still, we are expecting a net-cash position for the full year of FY22e, on the back of higher cash from higher net profit on a full-year basis.





















(Non-SGX Report) Fortress Minerals Ltd: Strong Iron-Ore Prices

<div><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
<div></div>
<h2>Fortress Minerals Ltd.</h2>
<h3>Ore production almost doubled this quarter</h3>
<div>
<ul>
<li>3Q21 results were better than expectations. Revenue was up 150.9% YoY, PATMI up 477.9% YoY. 9M21 PATMI formed 77.5% of our FY21e forecast.</li>
<li>3Q21 sales volume increased a stellar 93.8% YoY on the back of increased domestic demand for steel.</li>
<li>Maintain BUY with a higher TP of S$0.47, up from S$0.28. We raise FY21e PATMI by 69.2% to capture its 3Q outperformance. Our TP remains pegged to 11x FY21e, the industry average. Catalysts are expected from a 50% jump in production in FY21e and iron ore prices (Platts Iron Ore Index, IODEX 65% Fe CFR North China) remaining above US$110/DMT. The company announced a proposed US$30mn acquisition of Malaysia iron ore and copper producer.</li>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/259/original/image_76136468491617147195702.png?1617147199" class="editor-image img-responsive" data-smartkarma-image-id="198259"></figure>
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<p><strong>The Positives</strong></p>
<div>
<p><strong>+ Continued volume growth.</strong> Iron ore concentrate volumes sold increased 93.7% YoY in 3Q21. This translated to revenue growth of 150.9% YoY. Volume and revenue were both lower QoQ due to monsoon disruptions to production that typically occur at year-end.</p>
<p><strong>+ Spike in margins.</strong> Gross margins increased from 57.7% to 75.1% in 3Q21. Revenue for the quarter more than doubled, driven by higher prices for high-grade iron ore concentrates. Their ASP was a record US$110.06/DMT as iron ore prices reached a 7-year high. Average unit cost was also lower YoY through increased iron ore production.</p>
<p><strong>+ Operating cash flow increased</strong> <strong>7x. 3Q21 operating cash flow of US$11.7mn was 7x the US$1.6mn achieved a year ago.</strong> Net cash slightly dipped from US$9.9mn to US$9mn while FCF turned around from -US$328k in 3Q20 to US$10.4mn in 3Q21.</p>
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<p><strong>The Negative</strong><br>- Nil.</p>
</div>
</div>
</div>
</div>

Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.

Fortress Minerals Ltd.
Ore production almost doubled this quarter


3Q21 results were better than expectations. Revenue was up 150.9% YoY, PATMI up 477.9% YoY. 9M21 PATMI formed 77.5% of our FY21e forecast.
3Q21 sales volume increased a stellar 93.8% YoY on the back of increased domestic demand for steel.
Maintain BUY with a higher TP of S$0.47, up from S$0.28. We raise FY21e PATMI by 69.2% to capture its 3Q outperformance. Our TP remains pegged to 11x FY21e, the industry average. Catalysts are expected from a 50% jump in production in FY21e and iron ore prices (Platts Iron Ore Index, IODEX 65% Fe CFR North China) remaining above US$110/DMT. The company announced a proposed US$30mn acquisition of Malaysia iron ore and copper producer.



The Positives

+ Continued volume growth. Iron ore concentrate volumes sold increased 93.7% YoY in 3Q21. This translated to revenue growth of 150.9% YoY. Volume and revenue were both lower QoQ due to monsoon disruptions to production that typically occur at year-end.
+ Spike in margins. Gross margins increased from 57.7% to 75.1% in 3Q21. Revenue for the quarter more than doubled, driven by higher prices for high-grade iron ore concentrates. Their ASP was a record US$110.06/DMT as iron ore prices reached a 7-year high. Average unit cost was also lower YoY through increased iron ore production.
+ Operating cash flow increased 7x. 3Q21 operating cash flow of US$11.7mn was 7x the US$1.6mn achieved a year ago. Net cash slightly dipped from US$9.9mn to US$9mn while FCF turned around from -US$328k in 3Q20 to US$10.4mn in 3Q21.

The Negative - Nil.





(Non-SGX Report) Fortress Minerals Ltd: Ore Production Almost Doubled This Quarter

<figure class="editor-figure mceNonEditable"><img src="https://api2.sgx.com/sites/default/files/2021-01/Capture_10.PNG" class="editor-image img-responsive"></figure>
<div class="content-caption">Fortress minerals CEO</div>
<p></p>
<p><strong>Fortress Minerals Rides Iron Ore Uptrend </strong></p>
<p>The indomitable spirit of enterprise burns bright in civil and earth works contractor turned mining executive Dato’ Sri Ivan Chee.</p>
<p>For the CEO of SGX-listed Fortress Minerals Ltd, the struggles and achievements of entrepreneurs – in brick-and-mortar as well as digital economies – are a constant source of inspiration.</p>
<p>“I admire their foresight, focus, sacrifices and dedication in achieving their ultimate passion – I constantly remind myself to learn from their examples and experiences,” said Chee.</p>
<p>“I have many passions, but in business, my passion is to build a truly great Malaysian mining company that our team members and their families can be proud of.”</p>
<p>The 55-year-old has more than two decades of civil and earth works construction experience under his belt. He has spent another eight years of his career in the mining industry, building up his portfolio and reputation by undertaking several iron ore mining projects since the early 2010s.</p>
<p>Chee has been leading Fortress Minerals since 2011, taking on the role of Executive Director cum Chief Executive Officer. In 2018, he was conferred the Legacy and Business Excellence of the Year title by Malaysia’s SME &amp; Entrepreneurship Business Award.</p>
<p>His greatest sense of satisfaction comes from witnessing changes in the welfare of employees as well as the broader community, as a result of the Group’s operations.</p>
<p>“We’ve observed vast improvement in the financial and social well-being of residents in the vicinity of our Bukit Besi Mine – over the years, we’ve met their needs by providing stable employment and basic infrastructure,” Chee pointed out.</p>
<p>“My ambition is to contribute to the building of a resilient society and economy by creating business opportunities, as well as a healthy and safety-conscious workforce culture.”</p>
<p>Listed on SGX Catalist since March 2019, Malaysia-based Fortress Minerals is a high-grade iron ore concentrate producer. The Group currently produces magnetite iron ore concentrates with TFe grade of 65% and above, mined from the East, Valley and West Deposits in its Bukit Besi Mine, located in Malaysia’s Terengganu state. It sells these iron ore concentrates primarily to steel mills and trading companies.</p>
<p><strong>Competitive Edge</strong></p>
<p>“Right from the start, we’ve adopted the strategy of producing high-grade iron ore concentrate because this grade continues to enjoy robust demand and premium pricing,” Chee noted.</p>
<p>“While the iron ore price index is determined by market forces, we expect high-grade ore to command a premium over lower grades given its higher iron content and low impurities, which enhances production efficiency levels for steel makers.”</p>
<p>In particular, its high-grade magnetite concentrate has seen a strong price performance over the last six months, thanks to increasing demand from steel mills in the region, including China.</p>
<p>“Steel makers are seeking to reduce their greenhouse gas emissions, placing more emphasis on using high-grade magnetite concentrate, which raises blast furnace productivity and lowers emissions,” Chee said.</p>
<p>“We believe our focus on high-grade magnetite concentrates will provide us with the competitive edge in both domestic and export markets.”</p>
<p>In the broader industry, iron ore prices have strengthened over 2020, with the steel-making raw material poised to become the world’s top-performing commodity for the second consecutive year, buoyed by speculative fund flows and robust China demand.</p>
<p>These high market prices are expected to continue into the first quarter of 2021, supported by strong Chinese steel output, according to the latest S&amp;P Global Platts Iron Ore &amp; Steel Outlook.</p>
<p>In October, Fortress Minerals announced a new off-take agreement that will allow it to secure sales volume commitment of approximately 400,000 wet metric tonnes (WMT) from a domestic steel mill for a period between 1 September 2020 and 31 August 2021. Under this agreement, the pricing will be based on prevailing international market index prices.</p>
<p>“The agreement is a testament to the consistent demand for our quality, high-grade iron ore concentrate, and strong business relationships with our customers,” Chee noted. “It also demonstrates our operating efficiencies and ability to successfully integrate into our customers’ complex value chains to create mutual benefit.”</p>
<p>The Group is confident that it is on track to produce over and above its off-take obligations, with a surplus to sell to other customers, he added.</p>
<p>For the half year ended 31 August 2020, Fortress Minerals reported a net profit after tax of US$7.8 million, more than double the US$3.6 million in the year-earlier period, while revenue surged 47.4% to reach US$20.1 million.</p>
<p>Iron ore deliveries and shipments of 210,143 dry metric tonnes (DMT) were 59.3% higher than a year ago. Its gross profit margin stood at 75.3%, up 6.2 percentage points year-on-year.</p>
<p>Fortress Minerals continues to invest in various initiatives and machinery upgrades to enhance its production and cost efficiencies without sacrificing product quality, or the safety and well-being of its employees.</p>
<p>“In our business, economies of scale play a crucial role in our cost and margin optimisation processes,” Chee noted.</p>
<p><strong>Evaluating Opportunities</strong></p>
<p>In terms of resources, the Group’s Joint Iron Ore Reserves Committee (JORC) resource estimate expanded to 7.18 million tonnes as of 29 February 2020, despite depletion through production and sales.</p>
<p>“With our structural and systematic exploration programmes, we’re comfortable with the quantity of iron ore resource defined at our Bukit Besi mine,” Chee noted.</p>
<p>“Apart from the discovery of new resources which can replenish our mined resource and add to opportunities for future mining, we’ve adopted a low-cost exploration strategy to continuously add new resources net of depletion, so as to extend the life of our mine.”</p>
<p>At the same time, the Group is seeking opportunities to acquire and/or enter into joint ventures for new mining assets, either in Malaysia or the region, Chee said.</p>
<p>“Since our listing, we’ve reserved funds for this purpose. To-date, we have evaluated various opportunities, in both iron ore and other minerals, and will at the appropriate juncture, inform our shareholders accordingly.”<br><br>Despite a relatively robust outlook, industry pressures continue to mount, not the least of which is competition for human capital.</p>
<p>“Over the years, we’ve invested substantially to continually build and develop our team members. Even so, this process has been challenging for us as we operate in a very competitive environment,” Chee noted.</p>
<p>“Nonetheless, I’m glad to say we’ve had decent success in attracting and retaining our talent. And for that, I give credit to my senior management team members for the various strategies and approaches they’ve adopted over the years.”</p>
<p>The challenges brought about by COVID-19 and the nationwide lockdown also weigh on Chee. “The question, ‘When will all this be over?’ is always at the top of my mind, as uncertainties generated by the pandemic continue to fuel a pervasive sense of fatigue and disillusionment among family, employees, and across businesses,” he noted.</p>
<p>“But during these difficult times, there are opportunities to infuse new hope and energy into the Group, paving the way for us to outperform when we finally embark on the road to recovery,” he added.</p>
<p>“I believe that as a leader, I can make a difference through personal accountability, caring and ‘re-onboarding’ of our people to weather these challenges.”</p>
<p>Meanwhile, this father of seven children – three boys and four girls aged 18 to 27 – hopes to pass on his core values of integrity, honesty, and diligence. “I believe that my commitment to my work is a testament to my character, and I hope some of that rubs off on them.”</p>
<p>But more importantly, Chee has this advice for his children: Enjoy the season you are in right now, and be aware of how far you have come.&nbsp;</p>
<p>“In our hyperconnected world, where it’s easy to sell ourselves short and constantly measure ourselves to others, remember that we are our own greatest challenge. It is only against ourselves – our successes and failures – that we should make our comparisons, not the rest of the world.”<br><br>&nbsp;</p>
<p><strong>Fortress Minerals Ltd </strong></p>
<p>Based in Malaysia, Fortress Minerals is principally in the business of exploration, mining, production and sale of high-grade iron ore concentrates. The Group presently produces magnetite iron ore concentrates with TFe grade of 65.0% and above, mined from the East, Valley and West Deposits in its Bukit Besi Mine, and sells its iron ore concentrates primarily to steel mills and trading companies.</p>
<p>The company website is: <a href="http://www.fortress.sg" target="_blank" rel="noopener"><strong>www.fortress.sg</strong></a></p>
<p>Click <a href="https://www.sgx.com/securities/equities/OAJ" target="_blank" rel="noopener"><strong>here</strong></a> for the company's StockFacts page.</p>
<p>For the three months ended 31 August 2020 financial results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/DY1KJ1B7EG6QMN1Q/634418_FML%20-%20Press%20Release%20-%207%20October%202020.pdf" target="_blank" rel="noopener"><strong>here</strong></a>.</p>
<p>&nbsp;</p>
<p><strong>About&nbsp;kopi-C: the Company brew</strong></p>
<p><strong>Text: Jennifer Tan-Stanisic</strong><br><strong>Photo: Company file</strong><br><br><em>kopi-C&nbsp;</em>is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.<br><br>For previous editions of&nbsp;<em>kopi-C: the Company brew,</em>&nbsp;please click&nbsp;<a href="https://www.sgx.com/research-education/market-dialogues" target="_blank" rel="noopener"><strong>here</strong></a>. &nbsp;<br><br>For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to&nbsp;<a href="https://www.sgx.com/jennifer.t@sgx.com" target="_blank" rel="noopener"><strong>jennifer.t@sgx.com</strong></a>.</p>


Fortress minerals CEO

Fortress Minerals Rides Iron Ore Uptrend 
The indomitable spirit of enterprise burns bright in civil and earth works contractor turned mining executive Dato’ Sri Ivan Chee.
For the CEO of SGX-listed Fortress Minerals Ltd, the struggles and achievements of entrepreneurs – in brick-and-mortar as well as digital economies – are a constant source of inspiration.
“I admire their foresight, focus, sacrifices and dedication in achieving their ultimate passion – I constantly remind myself to learn from their examples and experiences,” said Chee.
“I have many passions, but in business, my passion is to build a truly great Malaysian mining company that our team members and their families can be proud of.”
The 55-year-old has more than two decades of civil and earth works construction experience under his belt. He has spent another eight years of his career in the mining industry, building up his portfolio and reputation by undertaking several iron ore mining projects since the early 2010s.
Chee has been leading Fortress Minerals since 2011, taking on the role of Executive Director cum Chief Executive Officer. In 2018, he was conferred the Legacy and Business Excellence of the Year title by Malaysia’s SME &amp; Entrepreneurship Business Award.
His greatest sense of satisfaction comes from witnessing changes in the welfare of employees as well as the broader community, as a result of the Group’s operations.
“We’ve observed vast improvement in the financial and social well-being of residents in the vicinity of our Bukit Besi Mine – over the years, we’ve met their needs by providing stable employment and basic infrastructure,” Chee pointed out.
“My ambition is to contribute to the building of a resilient society and economy by creating business opportunities, as well as a healthy and safety-conscious workforce culture.”
Listed on SGX Catalist since March 2019, Malaysia-based Fortress Minerals is a high-grade iron ore concentrate producer. The Group currently produces magnetite iron ore concentrates with TFe grade of 65% and above, mined from the East, Valley and West Deposits in its Bukit Besi Mine, located in Malaysia’s Terengganu state. It sells these iron ore concentrates primarily to steel mills and trading companies.
Competitive Edge
“Right from the start, we’ve adopted the strategy of producing high-grade iron ore concentrate because this grade continues to enjoy robust demand and premium pricing,” Chee noted.
“While the iron ore price index is determined by market forces, we expect high-grade ore to command a premium over lower grades given its higher iron content and low impurities, which enhances production efficiency levels for steel makers.”
In particular, its high-grade magnetite concentrate has seen a strong price performance over the last six months, thanks to increasing demand from steel mills in the region, including China.
“Steel makers are seeking to reduce their greenhouse gas emissions, placing more emphasis on using high-grade magnetite concentrate, which raises blast furnace productivity and lowers emissions,” Chee said.
“We believe our focus on high-grade magnetite concentrates will provide us with the competitive edge in both domestic and export markets.”
In the broader industry, iron ore prices have strengthened over 2020, with the steel-making raw material poised to become the world’s top-performing commodity for the second consecutive year, buoyed by speculative fund flows and robust China demand.
These high market prices are expected to continue into the first quarter of 2021, supported by strong Chinese steel output, according to the latest S&amp;P Global Platts Iron Ore &amp; Steel Outlook.
In October, Fortress Minerals announced a new off-take agreement that will allow it to secure sales volume commitment of approximately 400,000 wet metric tonnes (WMT) from a domestic steel mill for a period between 1 September 2020 and 31 August 2021. Under this agreement, the pricing will be based on prevailing international market index prices.
“The agreement is a testament to the consistent demand for our quality, high-grade iron ore concentrate, and strong business relationships with our customers,” Chee noted. “It also demonstrates our operating efficiencies and ability to successfully integrate into our customers’ complex value chains to create mutual benefit.”
The Group is confident that it is on track to produce over and above its off-take obligations, with a surplus to sell to other customers, he added.
For the half year ended 31 August 2020, Fortress Minerals reported a net profit after tax of US$7.8 million, more than double the US$3.6 million in the year-earlier period, while revenue surged 47.4% to reach US$20.1 million.
Iron ore deliveries and shipments of 210,143 dry metric tonnes (DMT) were 59.3% higher than a year ago. Its gross profit margin stood at 75.3%, up 6.2 percentage points year-on-year.
Fortress Minerals continues to invest in various initiatives and machinery upgrades to enhance its production and cost efficiencies without sacrificing product quality, or the safety and well-being of its employees.
“In our business, economies of scale play a crucial role in our cost and margin optimisation processes,” Chee noted.
Evaluating Opportunities
In terms of resources, the Group’s Joint Iron Ore Reserves Committee (JORC) resource estimate expanded to 7.18 million tonnes as of 29 February 2020, despite depletion through production and sales.
“With our structural and systematic exploration programmes, we’re comfortable with the quantity of iron ore resource defined at our Bukit Besi mine,” Chee noted.
“Apart from the discovery of new resources which can replenish our mined resource and add to opportunities for future mining, we’ve adopted a low-cost exploration strategy to continuously add new resources net of depletion, so as to extend the life of our mine.”
At the same time, the Group is seeking opportunities to acquire and/or enter into joint ventures for new mining assets, either in Malaysia or the region, Chee said.
“Since our listing, we’ve reserved funds for this purpose. To-date, we have evaluated various opportunities, in both iron ore and other minerals, and will at the appropriate juncture, inform our shareholders accordingly.”  Despite a relatively robust outlook, industry pressures continue to mount, not the least of which is competition for human capital.
“Over the years, we’ve invested substantially to continually build and develop our team members. Even so, this process has been challenging for us as we operate in a very competitive environment,” Chee noted.
“Nonetheless, I’m glad to say we’ve had decent success in attracting and retaining our talent. And for that, I give credit to my senior management team members for the various strategies and approaches they’ve adopted over the years.”
The challenges brought about by COVID-19 and the nationwide lockdown also weigh on Chee. “The question, ‘When will all this be over?’ is always at the top of my mind, as uncertainties generated by the pandemic continue to fuel a pervasive sense of fatigue and disillusionment among family, employees, and across businesses,” he noted.
“But during these difficult times, there are opportunities to infuse new hope and energy into the Group, paving the way for us to outperform when we finally embark on the road to recovery,” he added.
“I believe that as a leader, I can make a difference through personal accountability, caring and ‘re-onboarding’ of our people to weather these challenges.”
Meanwhile, this father of seven children – three boys and four girls aged 18 to 27 – hopes to pass on his core values of integrity, honesty, and diligence. “I believe that my commitment to my work is a testament to my character, and I hope some of that rubs off on them.”
But more importantly, Chee has this advice for his children: Enjoy the season you are in right now, and be aware of how far you have come.&nbsp;
“In our hyperconnected world, where it’s easy to sell ourselves short and constantly measure ourselves to others, remember that we are our own greatest challenge. It is only against ourselves – our successes and failures – that we should make our comparisons, not the rest of the world.”  &nbsp;
Fortress Minerals Ltd 
Based in Malaysia, Fortress Minerals is principally in the business of exploration, mining, production and sale of high-grade iron ore concentrates. The Group presently produces magnetite iron ore concentrates with TFe grade of 65.0% and above, mined from the East, Valley and West Deposits in its Bukit Besi Mine, and sells its iron ore concentrates primarily to steel mills and trading companies.
The company website is: www.fortress.sg
Click here for the company's StockFacts page.
For the three months ended 31 August 2020 financial results, click here.
&nbsp;
About&nbsp;kopi-C: the Company brew
Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C&nbsp;is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  For previous editions of&nbsp;kopi-C: the Company brew,&nbsp;please click&nbsp;here. &nbsp;  For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to&nbsp;jennifer.t@sgx.com.

Fortress Minerals Rides Iron Ore Uptrend 

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.</strong>&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
<h2>FORTRESS MINERALS LTD.</h2>
<h3>Rise of an iron-ore producer</h3>
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<div>
<ul>
<li>Growing demand from steel mills in Malaysia to spur higher sales volumes. We project 54% volume growth from FY20 to FY22e.</li>
<li>Low production cost of US$28.81/WMT. Reserves to expand with only 5% of its mining concession area explored so far.</li>
<li>Initiate coverage with BUY and TP of S$0.28. Valued at 11x FY21e PE, in-line with industry average. Fortress is smaller in size but is growing faster and enjoy higher returns than industry.</li>
</ul>
<p><strong>Company Background<br></strong>Fortress Minerals (FML) is an iron ore concentrate producer in Malaysia. As FY2019 was the Group’s maiden year of commercial production, profitability margins were partly crimped by initial ramp-up costs and gestation. Its mining concession is located in Bukit Besi, Terangganu, Malaysia, with 7.18MT of reserves and 13 years of concession life.</p>
<p>FML explores, mines, produces and sells magnetite iron-ore concentrate. Steel is the world’s most commonly used metal and iron ore is a key ingredient in steel-making. FML sells primarily to steel mills in Malaysia and China.</p>
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<div>
<div>
<div>
<p><strong>Investment Merits</strong></p>
<div>
<div>
<div>
<div>
<ol style="list-style-type: decimal;">
<li>
<p>Healthy volume growth of 40% expected in FY21e to meet construction demand.<br>1HFY21 production volume surged 57% YoY to 231,007 WMT. Demand was driven by new offtake agreements with steel mills in Malaysia. We expect FML to increase production by 54% from FY20 to FY22e. Malaysia’s 9M2020 production of iron and steel bars and rods grew 5.5% YoY. On the basis of projected GDP growth of 6.5%-7.5% and construction-sector growth of 13.9% in 2021, demand for steel and iron ores is expected to increase.</p>
</li>
<li>
<p>High profitability due to low-cost structure and proximity to customers. Unit cost of US$28.8/WMT against ASPs of US$95.9/DMT yielded gross profit margins of 66.7% of (industry average of about 50%) in FY20. Another advantage FML has is the close proximity of its Bukit Besi mine – of about 100km – to domestic steel-mill customers. The quality of its iron ores (TFe grade of 65.0%), consistent supply and short delivery time are expected to ensure captive buyers from steel mills in Malaysia. Iron ores from Australia require a delivery time of about 10-20 days vs. daily trucking services in Malaysia.</p>
</li>
<li>
<p>Considerable exploration upside potential with 5% of concession area explored. FML completed its plant expansion in late FY2020. Of its concession area of 526.2 ha at Bukit Besi, less than 5% has been explored. There is thus substantial potential for mining as larger tracts are explored. FML’s mining rights will only expire in early 2033.</p>
</li>
</ol>
<p>We initiate coverage with a BUY rating and TP of S$0.28. Our TP is based on 11x FY21e PE, in-line with industry average.</p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>

Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
FORTRESS MINERALS LTD.
Rise of an iron-ore producer





Growing demand from steel mills in Malaysia to spur higher sales volumes. We project 54% volume growth from FY20 to FY22e.
Low production cost of US$28.81/WMT. Reserves to expand with only 5% of its mining concession area explored so far.
Initiate coverage with BUY and TP of S$0.28. Valued at 11x FY21e PE, in-line with industry average. Fortress is smaller in size but is growing faster and enjoy higher returns than industry.

Company Background Fortress Minerals (FML) is an iron ore concentrate producer in Malaysia. As FY2019 was the Group’s maiden year of commercial production, profitability margins were partly crimped by initial ramp-up costs and gestation. Its mining concession is located in Bukit Besi, Terangganu, Malaysia, with 7.18MT of reserves and 13 years of concession life.
FML explores, mines, produces and sells magnetite iron-ore concentrate. Steel is the world’s most commonly used metal and iron ore is a key ingredient in steel-making. FML sells primarily to steel mills in Malaysia and China.




Investment Merits






Healthy volume growth of 40% expected in FY21e to meet construction demand. 1HFY21 production volume surged 57% YoY to 231,007 WMT. Demand was driven by new offtake agreements with steel mills in Malaysia. We expect FML to increase production by 54% from FY20 to FY22e. Malaysia’s 9M2020 production of iron and steel bars and rods grew 5.5% YoY. On the basis of projected GDP growth of 6.5%-7.5% and construction-sector growth of 13.9% in 2021, demand for steel and iron ores is expected to increase.


High profitability due to low-cost structure and proximity to customers. Unit cost of US$28.8/WMT against ASPs of US$95.9/DMT yielded gross profit margins of 66.7% of (industry average of about 50%) in FY20. Another advantage FML has is the close proximity of its Bukit Besi mine – of about 100km – to domestic steel-mill customers. The quality of its iron ores (TFe grade of 65.0%), consistent supply and short delivery time are expected to ensure captive buyers from steel mills in Malaysia. Iron ores from Australia require a delivery time of about 10-20 days vs. daily trucking services in Malaysia.


Considerable exploration upside potential with 5% of concession area explored. FML completed its plant expansion in late FY2020. Of its concession area of 526.2 ha at Bukit Besi, less than 5% has been explored. There is thus substantial potential for mining as larger tracts are explored. FML’s mining rights will only expire in early 2033.


We initiate coverage with a BUY rating and TP of S$0.28. Our TP is based on 11x FY21e PE, in-line with industry average.













(Non-SGX Report) FORTRESS MINERALS LTD:  Rise of an Iron-Ore Producer

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX</strong>.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
<div>
<div>
<div>
<div>
<h2>FORTRESS MINERALS LTD.</h2>
<h3>Rise of an iron-ore producer</h3>
</div>
</div>
</div>
</div>
<div>
<div>
<div>
<div>
<ul>
<li>Growing demand from steel mills in Malaysia to spur higher sales volumes. We project 54% volume growth from FY20 to FY22e.</li>
<li>Low production cost of US$28.81/WMT. Reserves to expand with only 5% of its mining concession area explored so far.</li>
<li>Initiate coverage with BUY and TP of S$0.28. Valued at 11x FY21e PE, in-line with industry average. Fortress is smaller in size but is growing faster and enjoy higher returns than industry.</li>
</ul>
<div>
<div>
<div>
<div>
<p><strong>Company Background</strong></p>
<p>Fortress Minerals (FML) is an iron ore concentrate producer in Malaysia. As FY2019 was the Group’s maiden year of commercial production, profitability margins were partly crimped by initial ramp-up costs and gestation. Its mining concession is located in Bukit Besi, Terangganu, Malaysia, with 7.18MT of reserves and 13 years of concession life.</p>
<p>FML explores, mines, produces and sells magnetite iron-ore concentrate. Steel is the world’s most commonly used metal and iron ore is a key ingredient in steel-making. FML sells primarily to steel mills in Malaysia and China.</p>
<p><strong>Investment Merits</strong></p>
<p><strong>Healthy volume growth of 40% expected in FY21e to meet construction demand.</strong></p>
<ul>
<li>1HFY21 production volume surged 57% YoY to 231,007 WMT. Demand was driven by new offtake agreements with steel mills in Malaysia. We expect FML to increase production by 54% from FY20 to FY22e. Malaysia’s 9M2020 production of iron and steel bars and rods grew 5.5% YoY. On the basis of projected GDP growth of 6.5%-7.5% and construction-sector growth of 13.9% in 2021, demand for steel and iron ores is expected to increase.</li>
<li>High profitability due to low-cost structure and proximity to customers. Unit cost of US$28.8/WMT against ASPs of US$95.9/DMT yielded gross profit margins of 66.7% of (industry average of about 50%) in FY20. Another advantage FML has is the close proximity of its Bukit Besi mine – of about 100km – to domestic steel-mill customers. The quality of its iron ores (TFe grade of 65.0%), consistent supply and short delivery time are expected to ensure captive buyers from steel mills in Malaysia. Iron ores from Australia require a delivery time of about 10-20 days vs. daily trucking services in Malaysia.</li>
<li>Considerable exploration upside potential with 5% of concession area explored. FML completed its plant expansion in late FY2020. Of its concession area of 526.2 ha at Bukit Besi, less than 5% has been explored. There is thus substantial potential for mining as larger tracts are explored. FML’s mining rights will only expire in early 2033.</li>
</ul>
<p>We initiate coverage with a BUY rating and TP of S$0.28. Our TP is based on 11x FY21e PE, in-line with industry average.</p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>

Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.




FORTRESS MINERALS LTD.
Rise of an iron-ore producer









Growing demand from steel mills in Malaysia to spur higher sales volumes. We project 54% volume growth from FY20 to FY22e.
Low production cost of US$28.81/WMT. Reserves to expand with only 5% of its mining concession area explored so far.
Initiate coverage with BUY and TP of S$0.28. Valued at 11x FY21e PE, in-line with industry average. Fortress is smaller in size but is growing faster and enjoy higher returns than industry.





Company Background
Fortress Minerals (FML) is an iron ore concentrate producer in Malaysia. As FY2019 was the Group’s maiden year of commercial production, profitability margins were partly crimped by initial ramp-up costs and gestation. Its mining concession is located in Bukit Besi, Terangganu, Malaysia, with 7.18MT of reserves and 13 years of concession life.
FML explores, mines, produces and sells magnetite iron-ore concentrate. Steel is the world’s most commonly used metal and iron ore is a key ingredient in steel-making. FML sells primarily to steel mills in Malaysia and China.
Investment Merits
Healthy volume growth of 40% expected in FY21e to meet construction demand.

1HFY21 production volume surged 57% YoY to 231,007 WMT. Demand was driven by new offtake agreements with steel mills in Malaysia. We expect FML to increase production by 54% from FY20 to FY22e. Malaysia’s 9M2020 production of iron and steel bars and rods grew 5.5% YoY. On the basis of projected GDP growth of 6.5%-7.5% and construction-sector growth of 13.9% in 2021, demand for steel and iron ores is expected to increase.
High profitability due to low-cost structure and proximity to customers. Unit cost of US$28.8/WMT against ASPs of US$95.9/DMT yielded gross profit margins of 66.7% of (industry average of about 50%) in FY20. Another advantage FML has is the close proximity of its Bukit Besi mine – of about 100km – to domestic steel-mill customers. The quality of its iron ores (TFe grade of 65.0%), consistent supply and short delivery time are expected to ensure captive buyers from steel mills in Malaysia. Iron ores from Australia require a delivery time of about 10-20 days vs. daily trucking services in Malaysia.
Considerable exploration upside potential with 5% of concession area explored. FML completed its plant expansion in late FY2020. Of its concession area of 526.2 ha at Bukit Besi, less than 5% has been explored. There is thus substantial potential for mining as larger tracts are explored. FML’s mining rights will only expire in early 2033.

We initiate coverage with a BUY rating and TP of S$0.28. Our TP is based on 11x FY21e PE, in-line with industry average.









(Non-SGX Report) FORTRESS MINERALS LTD: Rise of an Iron-Ore Producer

Malaysia

Fortress Minerals Limited mines, processes, and distributes iron ore. The Company focuses on exploration, mining, production, and distribution of iron ore concentrates. Fortress Minerals serves customers in Singapore and Malaysia.

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(Non-SGX Report) FORTRESS MINERALS LTD: Rise of an Iron-Ore Producer

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

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