Fortescue Awaiting The Re-Rating
- Fortescue quarterly production report well received
- Management confident in maintaining annual production rate of 55Mtpa
- Brokers continue to see value at current levels
- Buy ratings retained
By Chris Shaw
The September quarter production report from Fortescue Metals ((FMG)) has been well received by the market, with both tonnes and costs coming in either in-line or better than most expectations. Total ore shipments for the period were 12.4 million tonnes at a unit cost of around US$50 per tonne. The only disappointment was a slightly lower than expected achieved price of US$160 per tonne.
Post the production report brokers have made minor changes to earnings estimates, UBS the most significant in lifting its net profit after tax estimate for FY12 by 6%. Consensus forecasts in earnings per share (EPS) terms stand at US72.3c in FY12 and US78.1c in FY13.
Along with the production report, management has expressed confidence in being able to maintain an annualised production rate of 55 million tonnes per annum. Citi estimates this equates to shipments for the December quarter of 13.5-14 million tonnes.