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.
Ferrexpo’s solid Q3 update greeted by Deutsche Bank and Seymour Pierce, target prices upheld
Following the third quarter trading update from Ferrexpo (LON:FXPO), both Deutsche Bank and Seymour Pierce are upholding their respective price targets, and the former has reiterated its ‘buy’ rating on the Ukrainian iron ore producer.
Ferrexpo confirmed yesterday that it improved total pellet production from its own ore during the third quarter of this year by 2.8 percent compared to the previous quarter.
It also said its investment programme is progressing as planned, with the Yeristovo deposit on schedule and budget to achieve first ore in 2013 and the Ferrexpo Poltava Mining project proceeding on schedule.
In its Pound Notes research note today, Deutsche Bank said Ferrexpo has increased spot sales to 25 percent as it increases its market position, which lowers the company's received price in the period. “Importantly however, volumes are intact. With the stock trading below our target price, we maintain our Buy recommendation,” Deutsche said.
Their target remains at 475 pence, a substantial premium to the current level of 313 pence.
Deutsche also said the company remains well funded with gross borrowing facilities of US$1 billion and a net debt position at the end of October of US$60 million.
Seymour Pierce featured Ferrexpo in its Morning Meeting today, after attending an analyst dinner last night.
“Overall we came away from the evening with renewed comfort that the company is maintaining a firm hold on its distribution during the recent tough markets,” wrote Matthew McDonald.
He reported on a confident presentation from the new chief executive of the marketing division.
Having joined the company in July, Jason Keys has had a quick honeymoon and, it seems, successfully taken the reins of the Marketing division, McDonald said.
Keys provided insights into the group's long term marketing strategy and Ferrexpo's desire to move to an index-based pricing model, highlighting some of the downfalls of the industry's quarterly contract system and the positives to engaging Asia in the spot market.
“It is a strategy that is serving the group well and the customer-base, which has been building up in China, has been able to pick up the slack experienced in some of the company's more traditional Central European markets. It is through this expanded customer base and its flexible logistical infrastructure that management are confident of meeting its sales volume target of 10 million tonnes for 2011 and to continue to sell all of its production into the new year,” the analyst concluded.
Seymour Pierce is maintaining its Ferrexpo target price at 503 pence.
