Fortescue Metals has made a strong start to FY21 with record shipments in the September quarter. The miner achieved 89% revenue realisation and finished the quarter in a solid cah position, the broker notes.
The broker believes the iron ore price will roll over at some point but while it remains resilient above US$100/t, the cash keeps flowing in for Fortescue and another big dividend is on the cards for February. The broker predicts $1.10 on a 6% payout and suggests the yield is enough to keep investors happy in such times of uncertainty.
Neutral and $16.50 target retained.
Target price is $16.50.Current Price is $16.62. Difference: ($0.12) – (brackets indicate current price is over target). If FMG meets the Credit Suisse target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).