Proactive Investors reported that UBS has taken a closer look at Ferrexpo and sees no reason to change its positive stance on the Swiss iron ore company.
UBS analyst Mr Myles Allsop said that while Ferrexpo is set to increase pellet production at its Ukrainian asset by more than 10% per annum in fiscal 2013-14 to 12 million tonnes, the capital intensity of the growth is below average and execution risk low, being brownfield.
Mr Allsop said that UBS expects iron ore prices to fall from 2014 but Ferrexpo can partly mitigate the effects of this with improved product quality and lower freight costs.
The Swiss bank's mining analyst said that "FXPO is in the lower half of the pellet cost curve, but could be the lowest-cost producer if the UAH [Ukrainian hryvnia] devalues the US dollar as expected by our economics team."
UBS sees a UAH devaluation as a potential material positive share price catalyst over the next 4 months and ascribes a more than 10% upside risk to consensus 2013 earnings per share forecasts.
Source - Proactive Investors
