Fortress Minerals

While maintaining a “buy” rating for Fortress Minerals, Phillip Securities analyst Vivian Ye has raised her target price for the iron ore mining company to 81 cents from 64 cents previously.

This comes after Fortress posted a stellar set of results for 1QFY2022 ended May 31.

According to Ye in her July 16 note, the company is expected to outperform ahead amid strong iron ore prices and favourable demand and supply dynamics, and as such, raised her FY2022 earnings forecast for the company by 41%.

Citing figures from the World Steel Association (WSA), Ye notes that global steel demand will grow 5.8% in 2021 to 1.87 billion tonnes, after dipping 0.2% in 2020.

Global steel demand will further grow 2.7% to 1.92 billion tonnes in 2022, according to WSA. Meanwhile, global iron-ore supply is facing uncertainties.

Major Brazilian iron-ore producer, Vale, recorded a q-o-q decline in iron ore sales of 28.4%, due to operational issues and maintenance at its S11D mine.

As such, Ye has now raised her average selling prices forecast by 37% to US$140 per dry metric tonne ($191.4 per dry metric tonne).

Fortunately for Fortress, the company’s mining operations are gradually reopening despite the Covid-19 restrictive measures imposed by the Malaysian government.

Certain states, such as Terengganu and Pahang where the company’s mines are located, have moved to Phase Two of a four-phase National Recovery Plan.

Phillip points out that the company’s Bukit Besi mine has gradually returned to “normalcy”, after resuming at an approved worker capacity of 80% on July 5.

“Catalysts are expected from an increase in production and strong iron-ore prices,” Phillip analyst Vivian Ye writes in a note dated July 16.

Strong iron ore prices