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The Case For Fortress Minerals Post Reply Rate topic
trader1970 Elite	31-Mar-2021 13:06        trader1970 About Contact  Quote this Post!
x 0   x 0  Alert Admin	The next Souther Alliance in the making.. Have to catch to be on par.. super laggard and undervalued... :)
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trader1970 Elite	31-Mar-2021 13:04        trader1970 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Watch this little darling.. break new high,,, Target at 40...
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noobshit Member	25-Mar-2021 12:59        noobshit About Contact  Quote this Post!
x 0   x 0  Alert Admin	Fair enough, if your horizon is shorter. KenMcGormick      ( Date: 25-Mar-2021 12:15) Posted: If you had bought SAM at 33c and sold it at 50++, then I really don' t care which is diamond which is coal. I' m more interested in which being more undervalued. Anyway, Fortress haven' t really reached the correction valuation yet. I' m just hoping for people to panic sell when they realise how shit the liquidity is.
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KenMcGormick Member	25-Mar-2021 12:15        KenMcGormick About Contact  Quote this Post! Style: Flexible   Mood:
x 0   x 0  Alert Admin	If you had bought SAM at 33c and sold it at 50++, then I really don' t care which is diamond which is coal. I' m more interested in which being more undervalued. Anyway, Fortress haven' t really reached the correction valuation yet. I' m just hoping for people to panic sell when they realise how shit the liquidity is.
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noobshit Member	24-Mar-2021 21:44        noobshit About Contact  Quote this Post!
x 0   x 0  Alert Admin	One is diamond the other is coal. KenMcGormick      ( Date: 18-Mar-2021 21:46) Posted: I think this counter is more liquid than SAM for iron ore play. Anyway, for the people who have been observing this industry for the past few months, they would be familiar the worth of these 2 companies. That is probably why after SAM gets pumped to the correct price, the same people exited SAM into fortress. For liquidity issues, SGX penny liquidity is always very shitty.
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Secret_Squirrel Elite	24-Mar-2021 18:59        Secret_Squirrel About Contact  Quote this Post!   Yells: "Stay curious but skeptical"
x 0   x 0  Alert Admin	Yesterday bought at 33.5 cents. intend to keep it for longer term, but hand itchy   queue to sell it at 35 cents just for fun as the price is stagnant. in the afternoon it was sold and it closed at 35.5 cents today. 😓   KenMcGormick      ( Date: 18-Mar-2021 21:46) Posted: I think this counter is more liquid than SAM for iron ore play. Anyway, for the people who have been observing this industry for the past few months, they would be familiar the worth of these 2 companies. That is probably why after SAM gets pumped to the correct price, the same people exited SAM into fortress. For liquidity issues, SGX penny liquidity is always very shitty.
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KenMcGormick Member	18-Mar-2021 21:46        KenMcGormick About Contact  Quote this Post! Style: Flexible   Mood:
x 0   x 0  Alert Admin	I think this counter is more liquid than SAM for iron ore play. Anyway, for the people who have been observing this industry for the past few months, they would be familiar the worth of these 2 companies. That is probably why after SAM gets pumped to the correct price, the same people exited SAM into fortress. For liquidity issues, SGX penny liquidity is always very shitty.
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Secret_Squirrel Elite	18-Mar-2021 15:00        Secret_Squirrel About Contact  Quote this Post!   Yells: "Stay curious but skeptical"
x 0   x 0  Alert Admin	Take a look at the annual repor under statistics of shareholdings. Total shares issued are 500,000,000 shares as of 20 May 2020. Top twenty shareholders as of 20 May 2020 (I think they had a typo error as 20 May 2019) shows that these top 20 shareholders own a combined of 499,177,470 shares. Assuming that these top 20 shareholders hold on to their shares, then there seems to be not much share floating on the market. If some among the top 20 shareholders sold of some of the shares then there will be more shares on the market. I guess we should look closer at the annual report  under the section of statistics of shareholder in the coming few months. I  also notice that in Jan 2021 and Feb 2021, one of the director also bought some of the shares. Need to look at the volume of the shares traded daily so far. How liquid is this stock?
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KenMcGormick Member	15-Mar-2021 11:49        KenMcGormick About Contact  Quote this Post! Style: Flexible   Mood:
x 0   x 0  Alert Admin	SAM people coming in to pump your bags liao... shiok?
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noobshit Member	05-Mar-2021 23:59        noobshit About Contact  Quote this Post!
x 0   x 0  Alert Admin	$0.315, mentioned under Results & Price.
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ThankYou Supreme	05-Mar-2021 23:47        ThankYou About Contact  Quote this Post!
x 0   x 0  Alert Admin	What&rsquo s your cost? noobshit      ( Date: 05-Mar-2021 23:44) Posted: In my opinion, this company is one of the most underrated ones on the market right now, with high upside, solid financials and several catalysts for future growth. I am perplexed as to why it is receiving so little attention by investors, and can only allude it to possibly the low float (only 50mil shares) and/or unfamiliarity with the iron ore industry (as mentioned by NextInsight). After all, Fortress was the first iron ore miner to list on SGX, followed by Southern Alliance. They are the only 2 iron ore miners on SGX. Quick Background Fortress is an iron ore miner listed on SGX Catalist with operations in Malaysia. Their focus is on high grade iron ore (65% or more Fe content, Fe being the symbol for iron). Their customers are mainly the domestic steel mills in Malaysia, although they may sell to customers in China as well. Their year end is February 2021, which just passed. The starting point of my analysis was the analyst report from Phillip with a target price of $0.47. Catalysts 1) Iron ore prices - If you didn' t know by now, iron ore prices are at an almost ten year high, with futures prices currently elevated till Nov 2022. Phillip' s basis for valuation was for Platts Iron Ore Index, IODEX 65% Fe CFR North China price remaining above US$110. I do not have IODEX 65% Fe prices, but you can see from Custeel that 65% Fe price was US$199.8 on 26th Feb 2021, and Fortress has been enjoying such high prices for their 4Q21, and I will talk about their forecasted FY21 results later.  2) Industry supply and demand - Of course you will question whether these high prices are sustainable. It is unlikely so, but prices are likely to remain elevated for the rest of 2021 and possibly 2022, as shared by major players like BHP, Rio Tinto and Vale. This is driven by Chinese demand, which makes up majority of the global demand. Other catalysts include lower production estimates by Vale, thus constraining supply (Australia and Brazil are the major producers of iron ore). Then there is also the highly likely fiscal stimuli from governments around the world in the form of infrastructure spending which requires steel, which requires iron ore. As the world recovers from COVID and economies start to recover, there will certainly be demand for iron ore, which is the world' s most commonly used metal. Supply is also not that easily increased as current or new mines take time to be expanded or built. It is thus not inconceivable for 65% Fe iron ore prices to remain in the US$130 - 160 range for the next 2 years. There is also talk of a new commodity super cycle starting, but I am a little skeptical and uncertain of that, so I will just leave it at that. 3) 1st competitive advantage of Fortress - Fortress' s gross profit margins are 75% based on ASP of US$100, while the industry average (Southern Alliance is an example) is only 50%. How ridiculous is that shit. How do you beat that shit. They have proven to be a very strong low cost producer, focusing on their operational efficiency and effectiveness instead of the iron ore price which they cannot control. They have substantially increased their volume production as well as their gross profit margins from 2019 to 2021. Their net profit margin is 51% compared to Southern Alliance at 34%. These margins will increase in tandem with the iron ore price. Fortress' s operational excellence instills confidence in their management team. 4) 2nd competitive advantage - They focus on high grade iron ore of at least 65% Fe which commands a premium over lower grade ones, and there are benefits of using higher grade iron ores, such as being more sustainable. China has been pushing for steel mills to be more sustainable and using higher grade iron ores is one of the methods as it produces less carbon when forging the steel. Higher grade iron ores are also preferred by steel mills as they increase steel yield and reduce steel production cost. Furthermore local demand from the steel mills far exceeds what Fortress currently produces. I am comfortable with the demand for Fortress' s iron ore, and it is up to them to ramp up production to meet that demand. 5) Offtake agreement - Fortress has a 1 year agreement till August 2021 to supply 400k wet metric tonnes aka WMT (around 360k dry metric tonnes aka DMT) of iron ore to a domestic steel mill at the Platts 65% Fe price. This is a major contract given their 9M21 quantity sold is only 300k DMT. So Fortress is able to sell locally (reduces China risk, policies can change quickly) but at international prices (enjoy the high prices and not fixed prices). This ensures a steady demand and revenue inflow for Fortress' s iron ore, and on top of that, the offtake agreement has optionality built into it, where Fortress can exercise the option to supply 20% more or 10% less iron ore. Given such high iron ore prices now, I expect Fortress to exercise the option to supply more, thus increasing their profits even further. 6) Acquisition of Mengapur mine - Fortress recently completed the acquisition of this mine which will increase their production and revenue in future. Given that the resources are only inferred and not indicated, there will be more work to be done before they can start mining and production. Nevertheless I do expect the mine to be operational in FY22, which drives my expectation for FY22 results to be even better than FY21, given that Fortress has only enjoyed the high iron ore prices for 4Q21, compared to potentially the full FY22. Expansion and growth is also what I like to see from Fortress, given that their aspirations are to be a regional iron ore player. I have confidence that management will be able to achieve that in 5 to 10 years time, from a small cap stock to a mid cap one, from Catalist to Mainboard. 7) Financials - Just look at them, enough said. Large cash balance, healthy cash flow, balance sheet and P& L are solid. Fortress will be taking on some debt to finance the acquisition, which I am fine with. Results & Price Having said all that, many people will be more interested in the upcoming results and price potential. I estimate a base case NPAT of US$19.6mil and best case of US$23.6mil for FY21, well exceeding Phillip' s estimate of US$15.7mil in either case. Phillips gives a PE of 11 which is the industry average, but I am uncertain how the market will value this company, so I provide a range of PE from 7 to 22, with a TP of $0.36 to $1.14 for base case and TP of $0.44 to $1.38 for best case. Also, Fortress targeted a dividend payout of at least 15% and 20% of NPAT for FY20 and FY21. However, they had already paid out 30% of NPAT for FY20, exceeding their target. So FY21 dividend payout ratio is most likely minimally 30% as well. However, I expect management to pay out more than 30% by proposing a special dividend for FY21, in line with what major players like BHP have done, on the back of surging iron ore prices. The directors have direct/deemed interest in about 90% of the shares, they will definitely want to get paid. So I expect a nice dividend for FY21 and hopefully for FY22 as well. (payout yields here are based on my entry price of $0.315)   USD/SGD = 1.33   Base case    Best case  Full year NPAT USD       19,555,661   23,571,876       EPS SGD                       0.052                   0.063       PE ratio 7                           0.36                     0.44 PE ratio 8                           0.42                     0.50 PE ratio 9                           0.47                     0.56 PE ratio 10                           0.52                     0.63 PE ratio 11                           0.57                     0.69 PE ratio 12                           0.62                     0.75 PE ratio 13                           0.68                     0.82 PE ratio 14                           0.73                     0.88 PE ratio 15                           0.78                     0.94 PE ratio 16                           0.83                     1.00 PE ratio 17                           0.88                     1.07 PE ratio 18                           0.94                     1.13 PE ratio 19                           0.99                     1.19 PE ratio 20                           1.04                     1.25 PE ratio 21                           1.09                     1.32 PE ratio 22                           1.14                     1.38       Dividend payout 30%               0.01561           0.01881 Dividend payout 35%               0.01821           0.02195 Dividend payout 40%               0.02081           0.02508       30% payout yield 4.95% 5.97% 35% payout yield 5.78% 6.97% 40% payout yield 6.61% 7.96% Conclusion At current price and PE levels, I feel Fortress is a steal. And if anyone can enlighten me on the reason for the low volume and interest in this stock, please do so. Thank you.
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noobshit Member	05-Mar-2021 23:44        noobshit About Contact  Quote this Post!
x 1   x 0  Alert Admin	In my opinion, this company is one of the most underrated ones on the market right now, with high upside, solid financials and several catalysts for future growth. I am perplexed as to why it is receiving so little attention by investors, and can only allude it to possibly the low float (only 50mil shares) and/or unfamiliarity with the iron ore industry (as mentioned by NextInsight). After all, Fortress was the first iron ore miner to list on SGX, followed by Southern Alliance. They are the only 2 iron ore miners on SGX. Quick Background Fortress is an iron ore miner listed on SGX Catalist with operations in Malaysia. Their focus is on high grade iron ore (65% or more Fe content, Fe being the symbol for iron). Their customers are mainly the domestic steel mills in Malaysia, although they may sell to customers in China as well. Their year end is February 2021, which just passed. The starting point of my analysis was the analyst report from Phillip with a target price of $0.47. Catalysts 1) Iron ore prices - If you didn' t know by now, iron ore prices are at an almost ten year high, with futures prices currently elevated till Nov 2022. Phillip' s basis for valuation was for Platts Iron Ore Index, IODEX 65% Fe CFR North China price remaining above US$110. I do not have IODEX 65% Fe prices, but you can see from Custeel that 65% Fe price was US$199.8 on 26th Feb 2021, and Fortress has been enjoying such high prices for their 4Q21, and I will talk about their forecasted FY21 results later.  2) Industry supply and demand - Of course you will question whether these high prices are sustainable. It is unlikely so, but prices are likely to remain elevated for the rest of 2021 and possibly 2022, as shared by major players like BHP, Rio Tinto and Vale. This is driven by Chinese demand, which makes up majority of the global demand. Other catalysts include lower production estimates by Vale, thus constraining supply (Australia and Brazil are the major producers of iron ore). Then there is also the highly likely fiscal stimuli from governments around the world in the form of infrastructure spending which requires steel, which requires iron ore. As the world recovers from COVID and economies start to recover, there will certainly be demand for iron ore, which is the world' s most commonly used metal. Supply is also not that easily increased as current or new mines take time to be expanded or built. It is thus not inconceivable for 65% Fe iron ore prices to remain in the US$130 - 160 range for the next 2 years. There is also talk of a new commodity super cycle starting, but I am a little skeptical and uncertain of that, so I will just leave it at that. 3) 1st competitive advantage of Fortress - Fortress' s gross profit margins are 75% based on ASP of US$100, while the industry average (Southern Alliance is an example) is only 50%. How ridiculous is that shit. How do you beat that shit. They have proven to be a very strong low cost producer, focusing on their operational efficiency and effectiveness instead of the iron ore price which they cannot control. They have substantially increased their volume production as well as their gross profit margins from 2019 to 2021. Their net profit margin is 51% compared to Southern Alliance at 34%. These margins will increase in tandem with the iron ore price. Fortress' s operational excellence instills confidence in their management team. 4) 2nd competitive advantage - They focus on high grade iron ore of at least 65% Fe which commands a premium over lower grade ones, and there are benefits of using higher grade iron ores, such as being more sustainable. China has been pushing for steel mills to be more sustainable and using higher grade iron ores is one of the methods as it produces less carbon when forging the steel. Higher grade iron ores are also preferred by steel mills as they increase steel yield and reduce steel production cost. Furthermore local demand from the steel mills far exceeds what Fortress currently produces. I am comfortable with the demand for Fortress' s iron ore, and it is up to them to ramp up production to meet that demand. 5) Offtake agreement - Fortress has a 1 year agreement till August 2021 to supply 400k wet metric tonnes aka WMT (around 360k dry metric tonnes aka DMT) of iron ore to a domestic steel mill at the Platts 65% Fe price. This is a major contract given their 9M21 quantity sold is only 300k DMT. So Fortress is able to sell locally (reduces China risk, policies can change quickly) but at international prices (enjoy the high prices and not fixed prices). This ensures a steady demand and revenue inflow for Fortress' s iron ore, and on top of that, the offtake agreement has optionality built into it, where Fortress can exercise the option to supply 20% more or 10% less iron ore. Given such high iron ore prices now, I expect Fortress to exercise the option to supply more, thus increasing their profits even further. 6) Acquisition of Mengapur mine - Fortress recently completed the acquisition of this mine which will increase their production and revenue in future. Given that the resources are only inferred and not indicated, there will be more work to be done before they can start mining and production. Nevertheless I do expect the mine to be operational in FY22, which drives my expectation for FY22 results to be even better than FY21, given that Fortress has only enjoyed the high iron ore prices for 4Q21, compared to potentially the full FY22. Expansion and growth is also what I like to see from Fortress, given that their aspirations are to be a regional iron ore player. I have confidence that management will be able to achieve that in 5 to 10 years time, from a small cap stock to a mid cap one, from Catalist to Mainboard. 7) Financials - Just look at them, enough said. Large cash balance, healthy cash flow, balance sheet and P& L are solid. Fortress will be taking on some debt to finance the acquisition, which I am fine with. Results & Price Having said all that, many people will be more interested in the upcoming results and price potential. I estimate a base case NPAT of US$19.6mil and best case of US$23.6mil for FY21, well exceeding Phillip' s estimate of US$15.7mil in either case. Phillips gives a PE of 11 which is the industry average, but I am uncertain how the market will value this company, so I provide a range of PE from 7 to 22, with a TP of $0.36 to $1.14 for base case and TP of $0.44 to $1.38 for best case. Also, Fortress targeted a dividend payout of at least 15% and 20% of NPAT for FY20 and FY21. However, they had already paid out 30% of NPAT for FY20, exceeding their target. So FY21 dividend payout ratio is most likely minimally 30% as well. However, I expect management to pay out more than 30% by proposing a special dividend for FY21, in line with what major players like BHP have done, on the back of surging iron ore prices. The directors have direct/deemed interest in about 90% of the shares, they will definitely want to get paid. So I expect a nice dividend for FY21 and hopefully for FY22 as well. (payout yields here are based on my entry price of $0.315)   USD/SGD = 1.33   Base case    Best case  Full year NPAT USD       19,555,661   23,571,876       EPS SGD                       0.052                   0.063       PE ratio 7                           0.36                     0.44 PE ratio 8                           0.42                     0.50 PE ratio 9                           0.47                     0.56 PE ratio 10                           0.52                     0.63 PE ratio 11                           0.57                     0.69 PE ratio 12                           0.62                     0.75 PE ratio 13                           0.68                     0.82 PE ratio 14                           0.73                     0.88 PE ratio 15                           0.78                     0.94 PE ratio 16                           0.83                     1.00 PE ratio 17                           0.88                     1.07 PE ratio 18                           0.94                     1.13 PE ratio 19                           0.99                     1.19 PE ratio 20                           1.04                     1.25 PE ratio 21                           1.09                     1.32 PE ratio 22                           1.14                     1.38       Dividend payout 30%               0.01561           0.01881 Dividend payout 35%               0.01821           0.02195 Dividend payout 40%               0.02081           0.02508       30% payout yield 4.95% 5.97% 35% payout yield 5.78% 6.97% 40% payout yield 6.61% 7.96% Conclusion At current price and PE levels, I feel Fortress is a steal. And if anyone can enlighten me on the reason for the low volume and interest in this stock, please do so. Thank you.
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