Cazenove issued a note on Ferrexpo PLC (LSE: FXPO) following the company’s interim management statement and production figures for the third quarter.
Taking year-to-date shipments and assuming a repeat of the third quarter leads the broker to raise its total 2009 shipments forecast to 9 million tonnes from 8.5 mt currently. “Remarkably this would imply a 3% increase in shipments year-on-year, a creditable performance under the circumstances,” it said.
Cazenove remains comfortable with its forecast of flat year-on-year total cash costs - “again this is a pretty good performance in light of Ukrainian CPI. The change to production translates into an EPS upgrade of 7% and 6% for 2009/10 respectively as we assume the group produces at 2009 rates in 2010.”
“We are increasingly of the view that a relatively cheap valuation for Ferrexpo’s core operating assets looks attractive in the context of progressively increasing European steel production and tightening pellet markets,” Cazenove added. It is maintaining its ‘in-line’ recommendation.