Credit Suisse thinks it is good idea, having labeled it “outperform”:
■ Earnings changes: We’ve updated our FMG earnings post our recent commodities update and the MarQ production result. Revised earnings forecasts see FY17 fall ~14% mainly on the back of revised price realisation guidance, with a 4% increase in FY18. We note our JunQ iron ore price of US$95/t is well out of the money and if we were to reduce our price to US$70/t for the quarter eps would fall another ~13% in FY17. FY18 eps changes are adjustments to currency only, all operating assumptions remain unchanged.
■ 1Q impacted by weather: Iron ore shipments 39.6Mt, below annualised guidance run rate and down 6% QoQ, impacted by heavy rainfall at the mine sites and several closures of the port. The weather impact reflected also in the US$13.06/t cost line but no change to either production nor cost guidance for FY17. YTD shipments total 125.7Mt.
