Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>Goldman Sachs has upgraded its iron ore price forecast, highlighting rising near-term demand from China's steel sector during the spring construction season and weather-related disruptions at Australian ports.</li>
<li>However, Goldman is bearish on iron ore for the second half (a consensus view), predicting a decline in China's steel demand and the emergence of lower-cost supply.</li>
<li>We continue to pound the table on <a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" rel="noopener">Fenix Resources (FEX AU)</a>. Read <a href="https://www.smartkarma.com/insights/fenix-resources-fex-au-q2-fy25-update-close-to-tripling-production" target="_blank" rel="noopener">"Fenix Resources (FEX AU) Q2 FY25 Update: Close to Tripling Production</a>.</li>
</ul>


Goldman Sachs has upgraded its iron ore price forecast, highlighting rising near-term demand from China's steel sector during the spring construction season and weather-related disruptions at Australian ports.
However, Goldman is bearish on iron ore for the second half (a consensus view), predicting a decline in China's steel demand and the emergence of lower-cost supply.
We continue to pound the table on Fenix Resources (FEX AU). Read "Fenix Resources (FEX AU) Q2 FY25 Update: Close to Tripling Production.


Iron Ore Tracker (10-Feb-2025): Rangebound / Pounding the Table On Fenix Resources (FEX AU)

<ul>
<li>Iron ore bounced back 7.7% last week to finish at 104 USD/ton. The short-term bullishness was due to temporary port closures for Hedland and Dampier due to cyclone warnings. </li>
<li>China TSF exceeded expectations for December, coming in at 2.85 trillion RMB, up 47% year over year (compared to street expectations of 2.15 trillion RMB). </li>
<li>We like the small-cap <a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU). </a>Read our research <a href="https://www.smartkarma.com/insights/fenix-resources-fex-au-deep-value-35-of-mkt-cap-in-cash-2-5x-pe-0-3-ev-ebitda-on-ramp-up" target="_blank" data-smartkarma-citation="insights:171736" rel="noopener">Fenix Resources (FEX AU): Deep Value, &gt;35% of Mkt Cap in Cash, 2.5x PE/0.3 EV-EBITDA on Ramp Up</a>. </li>
</ul>


Iron ore bounced back 7.7% last week to finish at 104 USD/ton. The short-term bullishness was due to temporary port closures for Hedland and Dampier due to cyclone warnings. 
China TSF exceeded expectations for December, coming in at 2.85 trillion RMB, up 47% year over year (compared to street expectations of 2.15 trillion RMB). 
We like the small-cap Fenix Resources (FEX AU). Read our research Fenix Resources (FEX AU): Deep Value, &gt;35% of Mkt Cap in Cash, 2.5x PE/0.3 EV-EBITDA on Ramp Up. 


Iron Ore Tracker (20-Jan-2025): Temporary Closure of Hedland and Dampier to Boost Prices

<ul>
<li>We expect iron ore to remain rangebound between 90 and 110 USD/ton in FY25, which is in line with the band it has maintained over the past six months. </li>
<li>Iron ore players like <a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" rel="noopener">Vale (VALE US)</a> and <a href="https://www.smartkarma.com/entities/fortescue-metals-group-ltd" target="_blank" rel="noopener">Fortescue Metals (FMG AU)</a> can maintain high single-digit dividend yields at USD 100/ton. We see short-term opportunities in these names.</li>
<li>For small-cap specialists, check out our research on <a href="https://www.smartkarma.com/insights/fenix-resources-fex-au-positive-developments-at-iron-ridge-and-other-catalysts" target="_blank" rel="noopener">Fenix Resources (FEX AU): Positive Developments At Iron Ridge And Other Catalysts.</a> The company (trailing 5x PE) is poised to triple its production.</li>
</ul>


We expect iron ore to remain rangebound between 90 and 110 USD/ton in FY25, which is in line with the band it has maintained over the past six months. 
Iron ore players like Vale (VALE US) and Fortescue Metals (FMG AU) can maintain high single-digit dividend yields at USD 100/ton. We see short-term opportunities in these names.
For small-cap specialists, check out our research on Fenix Resources (FEX AU): Positive Developments At Iron Ridge And Other Catalysts. The company (trailing 5x PE) is poised to triple its production.


Iron Ore Tracker (6-Jan-2025): What Does the New Year Hold in Store For Iron Ore

<ul>
<li>This is a follow-up to our initiation, <a href="https://www.smartkarma.com/insights/fenix-resources-fex-au-small-cap-iron-ore-miner-with-great-upside" target="_blank" rel="noopener">Fenix Resources (FEX AU): Small Cap Iron Ore Miner With Great Upside. </a>The flagship mine added <a href="https://wcsecure.weblink.com.au/pdf/FEX/02890696.pdf" target="_blank" rel="noopener">another 5 years to the existing 3-year mine life</a>. </li>
<li>At a 60 AUD/ton operating margin for 1.4 million tons/Yr (assuming 100 USD/ton iron ore price), this is an additional 60-65 mn AUD of cash profit for 5 years.  </li>
<li>The company has commenced production in the Shine iron ore mine (1.2 mtpa) and will shortly begin production in the Beebyn-W11 mine (1.5 mtpa) in early 2025 after obtaining permits.</li>
</ul>


This is a follow-up to our initiation, Fenix Resources (FEX AU): Small Cap Iron Ore Miner With Great Upside. The flagship mine added another 5 years to the existing 3-year mine life. 
At a 60 AUD/ton operating margin for 1.4 million tons/Yr (assuming 100 USD/ton iron ore price), this is an additional 60-65 mn AUD of cash profit for 5 years.  
The company has commenced production in the Shine iron ore mine (1.2 mtpa) and will shortly begin production in the Beebyn-W11 mine (1.5 mtpa) in early 2025 after obtaining permits.


Fenix Resources (FEX AU): Positive Developments At Iron Ridge And Other Catalysts

<ul>
<li>In the countdown to the <a href="https://www.scmp.com/business/china-business/article/3289527/investors-search-fresh-china-stimulus-signs-ahead-xi-jinpings-economic-conference" target="_blank" rel="noopener">China Economic Work Conference (CEWC)</a>, which<a href="https://www.scmp.com/business/china-business/article/3289527/investors-search-fresh-china-stimulus-signs-ahead-xi-jinpings-economic-conference" target="_blank" rel="noopener"> </a>will be held on December 11th/12th, the iron ore market remains range-bound, expecting further clarity on the economic stimulus.</li>
<li>Stocks like <a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" data-smartkarma-citation="entities:23731:1" rel="noopener">Vale (VALE US)</a> and <a href="https://www.smartkarma.com/entities/fortescue-metals-group-ltd" target="_blank" data-smartkarma-citation="entities:41:1" rel="noopener">Fortescue Metals (FMG AU)</a> continue to trade at double-digit dividend yields (9-10%), assuming 100 USD/ton.</li>
<li>With China's PMI improving, despite high inventories, there is an expectation of a restock for iron ore in the short term. We remain skeptical and continue to see range-bound activity.</li>
</ul>


In the countdown to the China Economic Work Conference (CEWC), which will be held on December 11th/12th, the iron ore market remains range-bound, expecting further clarity on the economic stimulus.
Stocks like Vale (VALE US) and Fortescue Metals (FMG AU) continue to trade at double-digit dividend yields (9-10%), assuming 100 USD/ton.
With China's PMI improving, despite high inventories, there is an expectation of a restock for iron ore in the short term. We remain skeptical and continue to see range-bound activity.


Iron Ore Tracker (9-Dec-2024): Stuck In A 95-110 USD/Ton Band, Restock On The Cards?

Australia

Fenix Resources Ltd operates as a resource exploration company. The Company explores for iron ore, vanadium, and manganese. Fenix Resources develops its projects in Australia.

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Fenix Resources (FEX AU)

Iron Ore Tracker (10-Feb-2025): Rangebound / Pounding the Table On Fenix Resources (FEX AU)

Iron ore received a boost as analysts upgraded their near-term forecasts, anticipating improved demand from China. We strongly recommend employing...

Sameer Taneja

Iron Ore Tracker (20-Jan-2025): Temporary Closure of Hedland and Dampier to Boost Prices

Iron ore supply has been temporarily curtailed by inclement weather in Australia and bounced back to >100 USD/ton. January is an important month as...

Sameer Taneja

Iron Ore Tracker (6-Jan-2025): What Does the New Year Hold in Store For Iron Ore

We summarize our estimates for iron ore pricing in CY25. We also provide some interesting equity/options-related opportunities for market...

Sameer Taneja