Metals and Mining
September 12, 2012
A fall in benchmark iron ore prices of 28% YtD coupled with high production costs will deliver a body blow to Ferrexpo’s 2012 earnings. We project that the company’s full-year EBITDA will fall by 50% YoY to USD 404mn. However, we expect a rebound in 2013 on capacity expansion and iron ore price recovery. Although we reduce our target price by 39% to USD 3.97, we maintain our BUY rating for the FXPO stock. Ferrexpo trades at 2013E EV/EBITDA of 3.3x, implying a 30% discount to its international peers.
