Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Commodities

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fortescue-metals-group-ltd" target="_blank" data-smartkarma-citation="entities:41:1" rel="noopener">Fortescue Metals (FMG AU)</a> reported a revenue/profit number of 8%/15%, with profits 8% lower than our expectations because of higher depreciation. </li>
<li>The company guided a mid-point iron ore shipment of 195 million tons (Vs. 192 in FY24) and a capex of 3.2 bn USD in metals/500 mn USD in Green Energy.</li>
<li>Trading at 6.7x PE with a 10% dividend yield (trailing) with iron ore prices averaging 118 USD in FY24, the focus shifts to a scenario analysis for FY25. </li>
</ul>



Fortescue Metals (FMG AU) reported a revenue/profit number of 8%/15%, with profits 8% lower than our expectations because of higher depreciation. 
The company guided a mid-point iron ore shipment of 195 million tons (Vs. 192 in FY24) and a capex of 3.2 bn USD in metals/500 mn USD in Green Energy.
Trading at 6.7x PE with a 10% dividend yield (trailing) with iron ore prices averaging 118 USD in FY24, the focus shifts to a scenario analysis for FY25. 


Fortescue Metals Group (FMG AU): FY24 Slightly Below Expectations, Focus on Iron Ore Price for FY25

<ul>
<li>We like <a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" data-smartkarma-citation="entities:23731:1" rel="noopener">Vale (VALE US)</a> for its exposure to high-grade iron ore (95% of EBITDA) and capital return discipline, with a current dividend yield of 8% and 3.5x EV-EBITDA. </li>
<li>The cash flows from the iron ore business could be used to invest in base metals, such as copper, nickel, etc., to enhance the portfolio. </li>
<li>The key risk remains the overhang from the Mariana Dam disaster being settled for  ~25.7 billion USD (vs. the current market cap of 50 billion USD). </li>
</ul>


We like Vale (VALE US) for its exposure to high-grade iron ore (95% of EBITDA) and capital return discipline, with a current dividend yield of 8% and 3.5x EV-EBITDA. 
The cash flows from the iron ore business could be used to invest in base metals, such as copper, nickel, etc., to enhance the portfolio. 
The key risk remains the overhang from the Mariana Dam disaster being settled for  ~25.7 billion USD (vs. the current market cap of 50 billion USD). 


VALE US: Exposure to High-Grade Iron Ore With >8% Dividend Yield

Metals, Ores, and Mining Firms, Mint Finance

Pranay Yadav

Metals, Ores, and Mining Firms

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

<ul>
<li>Iron ore prices rebounded strongly last week and continued rising this week, reversing losses from the previous week’s 9% decline</li>
<li>Chinese portside inventories of iron ore fell by 2.48 million tons in August, signaling strong demand despite slower drawdowns in the final weeks</li>
<li>SGX Iron Ore options saw a 20.7% decline in volume last week, with a sharp increase in the put/call ratio from 1.56 to 2.35, indicating increased bearish sentiment</li>
</ul>


Iron ore prices rebounded strongly last week and continued rising this week, reversing losses from the previous week’s 9% decline
Chinese portside inventories of iron ore fell by 2.48 million tons in August, signaling strong demand despite slower drawdowns in the final weeks
SGX Iron Ore options saw a 20.7% decline in volume last week, with a sharp increase in the put/call ratio from 1.56 to 2.35, indicating increased bearish sentiment


[IO Weekly 2024/34] Iron Ore Recovers as Chinese Stockpiles Decline and Fed Signals Boost Sentiment

<ul>
<li>Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.</li>
<li>With incremental news on China's stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term. </li>
<li>We also remain bullish on the 65-62 spread, which has expanded to the teens. <a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto Ltd (RIO AU)</a> and <a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" data-smartkarma-citation="entities:23731:1" rel="noopener">Vale (VALE US)</a>  are good plays on the spread.</li>
</ul>


Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.
With incremental news on China's stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term. 
We also remain bullish on the 65-62 spread, which has expanded to the teens. Rio Tinto Ltd (RIO AU) and Vale (VALE US)  are good plays on the spread.


Iron Ore: Disappointing Data Pushed Price Down to 105, Bounce To 120 On Further Stimulus From China

Managing Partner, VRS (Valuation & Research Specialists)

VRS (Valuation & Research Specialists)

Managing Partner

Valuation & Research Specialists (VRS) is a boutique financial advisor with more than 17 years of experience in Corporate Valuation and Finance, and a diversified client base including some of the largest Companies in Greece.

Since 2002, VRS has completed more than 200 engagements in the areas of business valuation and financial analysis for more than 100 clients in a wide range of industries.

VRS has been honored to work with small and large private and publicly traded companies in Europe and overseas.

Boutique Financial Advisor

<ul><li>According to Graph 1, during the period from May 20th, 2024 to August 23th, 2024, a consistent downward trend was observed in the prices of Iron Ore Fines 62% Fe CFR Futures – (TIOc1).</li><li>The prices gradually declined throughout the period, with a few minor fluctuations. During this period, the prices fell from around 115- 120 to just below 100.</li><li>The MA-10 and MA-20 trend lines followed a similar path, closely tracking the downward movement in prices.</li></ul>

According to Graph 1, during the period from May 20th, 2024 to August 23th, 2024, a consistent downward trend was observed in the prices of Iron Ore Fines 62% Fe CFR Futures – (TIOc1).The prices gradually declined throughout the period, with a few minor fluctuations. During this period, the prices fell from around 115- 120 to just below 100.The MA-10 and MA-20 trend lines followed a similar path, closely tracking the downward movement in prices.

Commodity Analysis - Iron Ore Fines 62% Fe CFR Futures - (TIOc1)

Australia

Iron ores are rocks and minerals from which metallic iron can be economically extracted. The ores are usually rich in iron oxides and vary in color from dark grey, bright yellow, deep purple, to rusty red. The iron itself is usually found in the form of magnetite (Fe3O4, 72.4% Fe), hematite (Fe2O3, 69.9% Fe), goethite (FeO(OH), 62.9% Fe), limonite (FeO(OH).n(H2O)) or siderite (FeCO3, 48.2% Fe).

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Iron Ore (IRON ORE COMDTY)

Fortescue Metals Group (FMG AU): FY24 Slightly Below Expectations, Focus on Iron Ore Price for FY25

We summarize the FY24 results of FMG AU ( Fortescue Metals Group ) and its conference call. We also provide a useful scenario analysis on dividend...

Sameer Taneja

VALE US: Exposure to High-Grade Iron Ore With >8% Dividend Yield

We initiate coverage on VALE US, one of the world's biggest iron ore producers, with high-grade iron ore and low-cost production. The stock trades...

Sameer Taneja

[IO Weekly 2024/34] Iron Ore Recovers as Chinese Stockpiles Decline and Fed Signals Boost Sentiment

Iron ore staged a strong recovery over the past week, reversing the sharp decline in week 32. Reduced Chinese stockpiles and optimistic sentiment...

Mint Finance

Iron Ore: Disappointing Data Pushed Price Down to 105, Bounce To 120 On Further Stimulus From China

We provide our take on the China data like TSF, auto sales and property that led to the sell-off in iron ore. We provide our rationale for an iron...

Sameer Taneja

Commodity Analysis - Iron Ore Fines 62% Fe CFR Futures - (TIOc1)

According to Graph 1, during the period from May 20th, 2024 to August 23th, 2024, a consistent downward trend was observed in the prices of Iron...

VRS (Valuation & Research Specialists)

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