271 replies to this topic

[Zero Hedge]

If you are a long term investor, then buy the bad news. If you got in at R390 awhile ago with say and got the dividend then at R370 you are breaking even. I doubt it will go much lower than this.
 
In 10 years time Kumba will still be around and there or thereabouts with the rest of the iron ore companies and you will have made some good dividends and at least stuck with inflation. Solid company and you can pick it up for cheap cheap! Some retailers sitting at ~20x PE (SHP) after their big correction, Kumba is at 8x PE and just recently posted good results.

SHP at 16.5x with sustainable and reasonably predictable growth give or take. KIO has made super profits over last couple of years with iron ore price north of USD 130. 8 PE is therefore very misleading. Already more than 20% downside to earnings if you plug in spot. Also not cheap on P/NPV basis. People forget that the then ISCOR almost closed the iron ore business in 1999. Now I don't say it will get that bad again but it is premature to call a bottom just yet.

[Zero Hedge]

They transport to China, Japan and Euro ... not sure about India.
 
OZ and Brazil supply is not a surprise.
 
Issue is with the Sishen mine ...which I believe is short term. 
 
Otherwise, from a valuation perspective, this thing is trading at 4x EBITDA  ... which is quite cheap in my books.

May look cheap only problem is that they made super profits with iron ore at USD130. Normalized EBITDA should be lot lower and all of a sudden the 4x becomes 6. The iron ore story was accident waiting to happen...

[__freeman__]

Thanks brendon. Nice site!

[Eagle7]

all I can say the last two days with Kumba have left me "Discombobulated"

[brendonfiddes]

Latest Valuation of KIO at http://www.relativev....co.za/kio.html

[__freeman__]

If you are a long term investor, then buy the bad news. If you got in at R390 awhile ago with say and got the dividend then at R370 you are breaking even. I doubt it will go much lower than this.

 

In 10 years time Kumba will still be around and there or thereabouts with the rest of the iron ore companies and you will have made some good dividends and at least stuck with inflation. Solid company and you can pick it up for cheap cheap! Some retailers sitting at ~20x PE (SHP) after their big correction, Kumba is at 8x PE and just recently posted good results.

[BloodBurner9000]

See http://www.reuters.c...N0KJ2C920140126

 

Kumbas's high quality ore is sure to remain in demand as China tries to improve its air quality.

[HDB]

They transport to China, Japan and Euro ... not sure about India.

 

OZ and Brazil supply is not a surprise.

 

Issue is with the Sishen mine ...which I believe is short term. 

 

Otherwise, from a valuation perspective, this thing is trading at 4x EBITDA  ... which is quite cheap in my books.

and they have the best quality ore which is always in demand!!

[ThatBlackGuy]

The horizon looks pretty bleak mid term.....Been digging around ( sorry I know  ) so take a read prior to jumping in price is cheap for a reason & this has got to be part of it. Kumba exports most of it's product to India & China..Got to be cheaper from OZ to China anyway take a look.

 

 

http://www.miningaus...bara-s-iron-ore

 

They transport to China, Japan and Euro ... not sure about India.

 

OZ and Brazil supply is not a surprise.

 

Issue is with the Sishen mine ...which I believe is short term. 

 

Otherwise, from a valuation perspective, this thing is trading at 4x EBITDA  ... which is quite cheap in my books.

[soutie]

The horizon looks pretty bleak mid term.....Been digging around ( sorry I know  ) so take a read prior to jumping in price is cheap for a reason & this has got to be part of it. Kumba exports most of it's product to India & China..Got to be cheaper from OZ to China anyway take a look.

 

 

http://www.miningaus...bara-s-iron-ore

[HDB]

Heres the answer for Kumbas big fall :

 

 

Iron ore extended its decline into a bear market, slumping by the most since August 2009, amid concern that demand in China is slowing just as rising output signals a global glut.

Ore with 62 percent content delivered to Tianjin fell 8.3 percent to $104.70 a dry ton, the lowest since October 2012 and the biggest drop in more than four years, according to data from The Steel Index Ltd. yesterday. The benchmark price lost 27 percent since Aug. 14, when it reached a five-month high of $142.80. The raw material dropped into a bear market on March 7.

BHP Billiton Ltd. (BHP) and Rio Tinto Group predict lower prices this year after producers inAustralia and Brazil spent billions of dollars to expand output. Banks from Citigroup Inc. to Standard Chartered Plc predict a global surplus, and Goldman Sachs Group Inc. listed iron ore among its least-preferred commodities for 2014. A surge in stockpiles at China’s ports spurred speculation the inventory overhang threatens imports.

“The fall in iron ore prices may reflect the beginning of a buyers’ strike in China’s iron ore markets, much like we saw in September 2012 when prices tumbled below $90, as surplus concerns mount,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in a report today. The market is “biased to oversupply in the very near term, and may prompt a further drop in the iron ore price.”

Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest producer, lost 0.3 percent to A$4.905 at 1:21 p.m. in Sydney after tumbling 9.4 percent yesterday. Rio Tinto added 0.9 percent to A$61.745, rebounding from a 5.8 percent loss, while BHP was 0.2 percent higher at A$36.235 after a 4.1 percent loss.

Buy Producers

While there may be further pressure on shares until iron ore bottoms out, investors should buy producers on the view that the raw material will average more than $110 a ton in 2014, UBS AG analysts led by Glyn Lawcock wrote in note dated yesterday.

China’s imports were 61.24 million metric tons in February, down from 86.83 million tons in January, according to customs data released on March 8. Stockpiles at ports stand at 105 million tons, 21 percent higher this year, according to data from Shanghai Steelhome Information Technology Co.

“Anecdotal evidence suggests that increases in stockpiles at the ports, especially iron ore, are for trade-finance deals instead of production,” HSBC Holdings Plc analysts Ma Xiaoping and Qu Hongbin said in a report.

BHP Chief Executive Officer Andrew Mackenzie said on Feb. 18 that supply growth may drive prices lower, joining Rio Chief Executive Officer Sam Walsh, who said in December that new capacity will lower prices this year.

The global seaborne surplus may climb to 67 million tons in 2014 from 2 million tons last year, Citigroup said March 3. Standard Chartered forecasts a glut of 136 million tons from a deficit in 2013. Prices may drop to $105 this year and $80 in 2015, Goldman analyst Christian Lelong said in a Jan. 20 report.

Premier Li Keqiang announced an economic growth target of 7.5 percent for this year at last week’s National People’s Congress in Beijing, a pace unchanged from 2013. China accounted for about 67 about percent of global import demand in 2013, according to Morgan Stanley.

[ThatBlackGuy]

ex divi 20 bucks today but fell more!!  well figures out of china were bad.. so all resources stock taking a hit.. But china is china and demand for ore will carry on especially kios quality!!

 

I believe the whole China story is overdone... yes they will restructure their economy. But it will take the better part of 20 years to go from production to consumption... just like the previous restructure. In the meantime, China will grow at 7% plus, demanding resources along the way....that's why the iron ore price doesn't bother me as such.

 

I've dabbled ... lets see. 

[HDB]

I want to invest, and this looks like a decent pull back... Don't know about closing my eyes though guys.

 

But I don't know whether there are any structural causes, eg

 

- Ex div

- New public info of a structural nature 

 

I'm ok with the weakness of iron ore for now ...

 

ex divi 20 bucks today but fell more!!  well figures out of china were bad.. so all resources stock taking a hit.. But china is china and demand for ore will carry on especially kios quality!!

[ThatBlackGuy]

Close your eyes and buy for your long term portfolio or just add to existing...

 

I want to invest, and this looks like a decent pull back... Don't know about closing my eyes though guys.

 

But I don't know whether there are any structural causes, eg

 

- Ex div

- New public info of a structural nature 

 

I'm ok with the weakness of iron ore for now ...

[HDB]

i agree on LT...view on cfd long? have an order in already but set "inactive" until i make decision and commit

use you one third theory!! Should work out fine!!

[delta66]

Close your eyes and buy for your long term portfolio or just add to existing...

i agree on LT...view on cfd long? have an order in already but set "inactive" until i make decision and commit

[HDB]

Can Someone who follows the share closely please provide some insight into what's happening?

Close your eyes and buy for your long term portfolio or just add to existing...

[ThatBlackGuy]

Can Someone who follows the share closely please provide some insight into what's happening?

[soutie]

Will be interested to see volumes tomorrow.

Daily average around 450k 

Since SENS daily volumes through the roof.

Today 2.38mil

Awaiting a SENS Re: someone reducing their holding

[AJS]

Long kio@43396

 

Still long?