Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

A buy-side analyst with over 18 years of experience investing in Asian markets and specializing in the mid-small cap space, emphasizing value investing in companies with good free cash flows/dividends and long-term holding horizons. 
Exempt Financial Adviser (EFA) under CrossASEAN Research Pte Ltd. 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 Analyst

Ganfeng Lithium: Will the Rally ‘Peter Out’ as Fundamentals Catch-Up

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

<p>Since my first insight on <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> on the 17th of March  2020 (<a href="https://www.smartkarma.com/insights/fortescue-metals-15-dividend-yield-buybacks-china-stimulus" target="_blank" data-smartkarma-citation="insights:37317" rel="noopener">Fortescue Metals 15% Dividend Yield/Buybacks + China Stimulus)</a>, a lot has happened:</p><ul>
<li>The stock is up 60%.</li>
<li>Iron ore prices are up 21%, due to supply issues from Brazil (owing to COVID).</li>
<li>Demand indicators in China, like property, construction, and autos, have turned positive, also resulting in higher ore prices.</li>
<li>Shipment Volumes have exceeded expectations at 178 million tons, topping the guidance of between 175-177 million tons for FY20. In its outlook for FY21, the company indicated  volumes would be flattish at around 175-180 million tons.</li>
</ul><p>At this point, booking some profit on the name would be a wise course of action. There could be potential headwinds in the future from :</p><ul>
<li>Property tightening measures, as mentioned by <a href="https://www.smartkarma.com/profiles/li-tang" target="_blank" data-smartkarma-citation="accounts:9462" rel="noopener">Li Tang</a> in his insight <a href="https://www.smartkarma.com/insights/china-holds-unprecedented-meeting-on-real-estate-work" target="_blank" data-smartkarma-citation="insights:41527" rel="noopener">China Holds Unprecedented Meeting on Real Estate Work</a>, as property accounts for 30% of steel demand from China.</li>
<li>We expect a surge in supply in H2 led by Vale, as the company will increase its shipments by 70 million tons HoH. If Vale adheres to its full-year guidance of delivering 310-330 million tons, it could potentially tip the market into oversupply. The caveat to this is that Vale has been serially disappointing on its volumes with shipments down 13% YTD.</li>
</ul>

Since my first insight on Fortescue Metals (FMG AU) on the 17th of March  2020 (Fortescue Metals 15% Dividend Yield/Buybacks + China Stimulus), a lot has happened:
The stock is up 60%.
Iron ore prices are up 21%, due to supply issues from Brazil (owing to COVID).
Demand indicators in China, like property, construction, and autos, have turned positive, also resulting in higher ore prices.
Shipment Volumes have exceeded expectations at 178 million tons, topping the guidance of between 175-177 million tons for FY20. In its outlook for FY21, the company indicated  volumes would be flattish at around 175-180 million tons.
At this point, booking some profit on the name would be a wise course of action. There could be potential headwinds in the future from :
Property tightening measures, as mentioned by Li Tang in his insight China Holds Unprecedented Meeting on Real Estate Work, as property accounts for 30% of steel demand from China.
We expect a surge in supply in H2 led by Vale, as the company will increase its shipments by 70 million tons HoH. If Vale adheres to its full-year guidance of delivering 310-330 million tons, it could potentially tip the market into oversupply. The caveat to this is that Vale has been serially disappointing on its volumes with shipments down 13% YTD.


Fortescue: Time to Book Some Profit on the Name?