Fortescue Shares Higher On Positive Earnings

Posted on | by Todd | Leave a Comment on Fortescue Shares Higher On Positive Earnings

Shares of Fortescue Metals Group opened firmer as the Iron Ore miner more than doubled its net profit to AUD 2.7 billion and pledged to pay shareholders a bigger dividend going forward.

FMG will pay a final, fully franked dividend of 25 cents per share, which pencils out to 52% of the company’s net profit after tax. The full year dividend was announced at 45 cents per share.

Looking into next year, FMG announced it would increase its dividend guidance to a range of 50 to 80% of net profit after tax.

We feel that the share price will run into resistance around the $6.10 level and aren’t buyers at these levels.

While Iron Ore has had a respectable price rebound off the $54.00 low posted in June, we don’t expect a protracted move higher back into the $80/82.00 range, which will temper the profit outlook for FMG.

Fortescue Metals Group

 

Iron Ore Slips Below $60.00

Posted on | by Todd | Leave a Comment on Iron Ore Slips Below $60.00

Spot prices of Iron Ore fell again overnight  dropping to a fresh seven-month low. The 62% grade was down over 2.5% to close at $57.02 per ton.

During the month of May, Iron Ore dropped over 17%, extending its decline from the multi-year high of $95.00 last traded in February.

Mining names BHP, RIO and FMG are all under pressure in early trade losing more than 1% each.

FMG has reached an eight-month low of $4.70. We see the next downside targets on Rio and BHP at $59.50 and $22.50, respectfully.

Rio Tinto

BHP

Fortescue Metals

 

Resources – Stop-Loss Required

Posted on | by Leon Hinde | Leave a Comment on Resources – Stop-Loss Required

Although many resource names have enjoyed a strong rally over the past 12 months, there’s reason to be cautious.

To protect capital we recommend investors holding resource names, run tight stop-losses below the recent lows.

Overall, investors should be reviewing their portfolio allocations, tilting to defensive names and ensuring access to effective portfolio hedging and shorting strategies are in place.

Chart – FMG
Chart – RIO

 

 

 

Index Rebalance

Posted on | by Leon Hinde | Leave a Comment on Index Rebalance

S&P ASX Index Rebalance – March Quarter

There were two changes in the ASX50 with Aristocrat (ALL) and Fortescue Metals (FMG) added and Coca Cola (CCL) and Seek (SEK) removed.

Macquarie Atlas (MQA) & Evolution Mining (EVN) added to the ASX100 with Sirtex (SRX) and Blackmores (BKL) removed.

There were no changes in the ASX200.

Washington H Soul Pattinson (SOL) added to the ASX300.

Chart – ALL
Chart – FMG