(Source: Trading View); one year performance of FMG.
Fortesque Limited share price has delivered a 1-year absolute return of approximately 28% and, in the last 5 years, has grown at a CAGR of approximately 44% YTD as of 1 Dec 2023. The share price closed at $24.99 in the 30 November closing and is currently trading at $25.20 as on 1 December 2023.
During the month of November 2023, Fortesque Limited was the talk of the town, as several key development initiatives triggered the month. The mammoth-sized mining company delivered an exponential return of over 10% in November.
Fortescue Metals Group Limited’s board approved a Final Investment Decision (FID) on 21 November 2023, on the “Phoenix Hydrogen Hub" in the USA, the “Gladstone PEM50 Project” in Queensland, Australia, and a “Green Iron Trial Commercial Plant” in Western Australia. The estimated total investment in the three approved projects was approximately US$750 million over the next three years. These are three of the first green hydrogen deals ever to be progressed to FID in the US and Australia, with a pipeline of projects to follow that will significantly scale up Fortescue’s global green energy production. There are various other projects also lined up, on which the company has been expediting initiatives such as ‘Pecem’ in Brazil, Project ‘Chui’ in Kenya, and ‘Holmaneset’ in Norway, representing a geographical and technological diversity to establish a global glide path for Fortescue Energy and its green hydrogen and technologies.
During the month of November, Fortescue advised that it is expanding its global manufacturing capabilities and building up a significant capex of US$35 million to kick-start a US Advanced Manufacturing Centre in the USA. Its new manufacturing centre will directly benefit from Inflation Reduction Act tax credits for battery modules, up to US$10 per kWh.
The company also launched the formation of a green energy accelerator platform named Fortescue Capital, announced on 16 November 2023. The formation of the new platform will enable the support of large-scale industrial solutions that can provide durable and high-impact de-carbonization pathways.
The valuation of Fortesque Limited as per multiple models
The stock is likely undervalued as per the multiple key metric; the implied value per share based on the EV/EBITDA multiple is $48.4, pointing to substantial room for price appreciation from its current trading level. This suggests that FMG may be undervalued, particularly in terms of its EBITDA, making it an intriguing prospect for potential investors.
Frequently Asked Questions (F.A.Q)
What are the results of Fortescue 2023?
Q1 FY2024, total ore mined reached 56.2Mt, up by 3% due to Iron Bridge's operational transition. Ore processing remained at 48.0Mt, like Q1 FY2023, impacted by pipeline and plant issues at Iron Bridge. Iron ore shipments for Q1 FY2024 were 45.9Mt, down 3% from Q1 FY2023, attributed to increased maintenance and lower port stocks after strong Q4 FY2023 shipments. The Pilbara Hematite C1 cost was US$17.93/wmt, a 2% increase from the previous quarter and 1% higher than Q1 FY2023.
What is Fortescue’s guidance for FY2024?
Guidance: Fortescue's FY2024 guidance includes: Iron ore shipments: 192-197 million tons, including 5 million tons from Iron Bridge. C1 cost for Pilbara Hematite: US$18.00–US$19.00/wmt. Metals capital expenditure: US$2.8–US$3.2 billion. The company has projected a net opex of around US$800 million and a capex of about US$400 million (excluding specific projects).
What is the FMG dividend for 2023?
The company has an annual dividend yield of 7% as of 1 December 2023.
How much debt does FMG have?
The company has maintained its debt level at an average of $7.1 billion over the years so far. The total debt value stood at $7.98 as of 30 June 2023.
Are Fortescue metals overvalued?
The stock is likely undervalued as per the multiple key metric; the implied value per share based on the EV/EBITDA multiple is $48.4, pointing to substantial room for price appreciation from its current trading level. This suggests that FMG may be undervalued, particularly in terms of its EBITDA, making it an intriguing prospect for potential investors.
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