Tag: ASX:FMG

Shares of Fortescue Metals are trading over 3% higher in early trade after the release of their Quarterly production results.

The report showed that Iron Ore shipments were down 4% to 40.5 million tons and the cost of production fell 4% to US $12.05 per ton, which is a record low overhead cost for the company.

With the mining and processing parts of the report as expected, the stock is firming on the lower cost of production, as well as the prospects that production costs could continue to decline.

FMG is part of our Top 50 Model Portfolio and our ALGO engine triggered a buy signal at $4.70 on May 15th.

Daily charts are showing stiff resistance in the $5.60 area. We suggest that investors who are long FMG work a sell-stop order at $4.95.

Fortesque Metals Group

The steady decline in Iron Ore prices over the past two weeks turned into a rout as concerns grow about new supply combined with fears that Chinese steel production may have peaked for the year.

The Steel Index benchmark price for Northern China 62% Iron Ore sank by 7.4% to trade at $63.00 per ton on Thursday, an 11-week low. On a Year-to-date basis, Iron Ore has dropped over 20%.

On September 11th, we posted a sell signal on FMG at $6.05, with an initial target of $5.40. FMG shares closed at $5.12 on Friday and now target the July 24th low of $4.88.

Fortesque Metals Group

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

FMG.ASX has rallied from $1.50 to $4.50 in the past 6 months. June Quarter shipments were strong and the company continues with further cost reduction. US$600m reduction in net debt and positive FY17 guidance of 170 Mt.