www.ferrexpo.com
Ferrexpo plc is a Swiss headquartered resource company with assets in Ukraine. We are principally involved in the production and export of iron ore pellets, which are used in the manufacture of steel. Our asset base comprises one of the largest iron ore resources in the world.
We produce around ten million tonnes of iron ore pellets per year and with several growth projects in place are aiming to double future production. We are committed to becoming a leading global supplier of iron ore pellets, providing outstanding service to our customers and strong returns to our shareholders.
We became the first Ukrainian company to be listed on the main market of the London Stock Exchange (ticker: FXPO) following a successful Initial Public Offering on 15 June 2007. We are a member of the FTSE 250 UK Index.
Ferrexpo plc is the only pure-play iron ore company currently listed on the London Stock Exchange.
Don’t be underweight miners, warns JP Morgan Cazenove
Although the ‘big-cap’ mining sector is down 29 per cent from this year’s peak, and it is the worst performing cyclical sector in the year to date, JP Morgan Cazenove analyst David Butler reckons portfolios should not be ‘underweight’ as far as the miners are concerned.
It is unwarranted for investors to be ‘underweight’ the mining sector given the weakened outlook for the US dollar and the superior growth prospects in China and other emerging markets, he said.
According to the JP Morgan analyst the ‘screen-traded’ metals are a strong hedge against inflation.
Highlighting ‘supportive’ commodity prices, the analyst picked out thermal coal and iron ore pricing as being particularly robust. Similarly he also emphasised that supply disruptions will keep the copper market tight.
With the diversified miners trading at twelve times next year’s (estimated) earnings the valuations are also ‘supportive’, Butler added.
His preferred mining stock is Rio Tinto (LON:RIO) which is rated as ‘overweight’ with a punchy £63.00 target that implies a 69 per cent rise from the current price of £37.52.
Butler sees even more ‘upside’ for his other preferred stock. The ‘overweight’ rated Anglo American (LON:AAL) is given a £45.00 target which implies a 83 per cent rise from the current price of £24.55.
The other pick in the sector is Mexican silver miner Fresnillo (LON:FRES) which is also rated ‘overweight’ with a £19.70 price target that implies a 9 per cent rise to the current £19.17 share price. The JP analyst said that Fresnillo was preferred because of its solid track record and “safe-haven” status.
Today’s bullish note from JP Morgan is the latest in a string of endorsements from the City. Given the scale of the pull-back this year many other analysts have tried to unearth some of the sector’s best value stocks.
Ukraine based iron pellet producer Ferrexpo (LON:FXPO) has been one of the hotly tipped stocks of late after it revealed that revenue and operating profit were up 63 per cent and 86 per cent ahead respectively in the first half of the financial year.
The interim results, which were announced at the start of August, showed that Ferrexpo benefited from increasing demand from the steel industry, mainly in Germany and Asia.
Deutsche Bank upgraded the stock from ‘hold’ to ‘buy’ in response to the news. The German bank reckons Ferrexpo shares are worth 490 pence each. It said that from its perspective the improvement in Ferrexpo’s results arose from better-than-expected cost performance and better achieved pricing.
“Ferrexpo has delivered an improved EBITDA results in a tough economic environment, moving the balance sheet to a net cash position of US$25 million,” said the bank.
Similarly Seymour Pierce and Evolution Securities also welcomed the results and they reiterated their ‘buy’ recommendations for Ferrexpo’s shares, along with their respective price targets of 569 pence and 520 pence.
One of London’s other miners, Antofagasta (LON:ANTO), is likely to be a key focus next week too as it reports its results. It often looked upon as an important bellwether for the copper market.
Analysts will be particularly keen to get an update on the progress being made with the ramp-up of production at the Esperanza copper project and indications of how the copper miner plans to use its cash resources considering its capex is set to decline.
Canaccord analyst Peter Mallin-Jones, for one, is forecasting interim earnings before interest, tax, depreciation and amortisation (EBITDA) of US$1.9 billion; net income of US$696 million; with earnings per share for the period coming in at US71 cents. Mallin Jones expects the company to declare an interim dividendUS5 cents/share but adds that the management may also feel confident enough to offer a special interim dividend.
