FMG 0.60% $9.91 fortescue metals group ltd

citi today........

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    Fortescue Metals Group Ltd (FMG.AX)
    Royalty Driven Loss
    ƒæ A$975m Loss for DecH07 ¡X Key feature of DecH07 was US$1b revaluation
    charge (A$1.4b pre-tax) on the Leucedia royalty. There was no other new
    information in the reported NPAT loss of A$975m as with no production
    interest is being capitalised ahead of project start-up. This has downgraded our
    irrelevant FY08 estimate, but there is no change to FY09+.
    ƒæ Leucedia Royalty ¡X The Leucedia royalty is a 4% revenue royalty on all
    production from Cloud Break and Christmas Creek through to 18 August 2019.
    The royalty is interest on a US$100m facility that was tied to a A$400m 2006
    placement, which was done at a premium to the share price at the time.
    ƒæ NPV A$1.83b ¡X Previous revaluation of Leucedia note was by A$304m to
    A$401m in FY07. The increase to A$1.83b (~A$1.3b post tax) has been driven
    by higher iron ore prices and production expectations (expansion to 110mtpa).
    The P&L hit is upfront, but the cash flow impact is over life through to 2019.
    ƒæ Our NPV A$1b. ¡X We assume a 50% probability of expansion to 110mtpa, and
    a royalty NPV of A$1b in our A$5.70/share FMG NPV. If probability was
    increased to 100% this would be A$1.1b (FMG NPV A$6.80/share), less than
    accounted for by FMG as we no doubt assume lower iron ore prices.
    ƒæ Sell Recommendation ¡X We recently initiated coverage on FMG with a Sell
    recommendation driven by combination of stretched price to NPV and risk of
    the company delivering against the aggressive ramp-up schedule ¡V please refer
    to ¡§Production to Construction Risk¡¨, 4 March 2008.
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Mkt cap ! $30.51B
Open High Low Value Volume
$9.90 $9.96 $9.85 $75.87M 7.666M

Buyers (Bids)

No. Vol. Price($)
1 21906 $9.90

Sellers (Offers)

Price($) Vol. No.
$9.91 38045 3
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Last trade - 16.10pm 06/12/2019 (20 minute delay) ?
-0.060 ( 0.49 %)
Open High Low Volume
$9.90 $9.96 $9.85 1673364
Last updated 15.59pm 06/12/2019 (live) ?
FMG (ASX) Chart
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