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Ferrexpo (FXPO)

johnhemming
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Ferrexpo (FXPO)

#259796

Postby johnhemming » October 24th, 2019, 9:37 am

Ferrexpo are an interesting mining company (they claim to be third in the world in mining Iron ore). Their figures seem OK in that they make a high net profit as a proportion of turnover.
https://www.youinvest.co.uk/market-research/LSE:FXPO
Oddly enough their income, however, is affected by the water levels in the Danube (use your browser to translate)
https://www.ukrrudprom.com/news/Spad_ur ... a_Gev.html

The reason their share price is going down is related to the activities of the CEO Kostyantyn Zhevago ( Константин Жеваго )
https://en.wikipedia.org/wiki/Kostyantyn_Zhevago

Who was until recently an elected Ukraine Politician.

He is a beneficiary of a trust that owns just over 50% of the shares in Ferrexpo.

Whilst the finances of the company report a gradual paying down of debt and a forecast yield of 13.3% (AJ Bell has I think the historic yield of 8.8% - one of the difficulties with secondary information) And a forecast PE of 2.3
https://www.sharecast.com/equity/Ferrexpo

Investors have been running away and the price has been taking a dive. It has in the past been really low, but that probably was when iron prices were lower.(I have not checked the history that far back)

There are a number of areas of criticism of Ferrexpo.

The first historic one (in the sense of 2016) is that Ferrexpo lost about £170m when Zhevago's bank went bust). Zhevago is being reported by the Ukranian prosecutor as being wanted for an investigation into whether he took funds from his bank. https://www.investegate.co.uk/ferrexpo- ... 00230511O/
I have seen something which indicates he is not in Ukraine for what are claimed to be medical reasons.

The second one relates to "Blooming Land"
http://www.ferrexpo.com/investor-relati ... -committee
Blooming Land is supposed to be a charity funded by Ferrexpo for Company Social Responsibility reasons. The company has concluded that it is formally independent of Ferrexpo. However, one has to be realistic and accept that any independent agency will be influenced by the people paying it in some way.
https://www.theguardian.com/business/20 ... propriated
The question is whether this might give any liabilty for Ferrexpo itself.

The third issue relates to the resignation of Deloittes as auditor earlier this year and the sale of shares by the Finance Director around this
They have since appointed Baker Tilley (so it is not a situation where no-one will act).
http://www.ferrexpo.com/investor-relati ... nt-auditor
The company said that the sale of the shares by the CFO in April was not related to the resignation of Deloittes. He sold 150,000 shares. I believe that because the same director did a similar transaction a year previously and he still holds more stock than he sold.

The fourth issue relates to governance and the resignation of two of the independent directors.
http://www.ferrexpo.com/investor-relati ... signations
This is timed around the fuss relating to the charity and they were involved in the review. (paid USD 24m in 2017, 9.5m in 2018)
Deloittes found some discrepancies in the information they had from the charity. One has to assume something iffy has gone on.

A fifth issue relates to the sponsorship of a football club
https://en.wikipedia.org/wiki/FC_Vorskla_Poltava
But to be fair that is the sort of thing that tends to go on. Whether it is commercially sensible or not it is not unique.

My personal conclusion from the above is that the market has overreacted to what are not necessarily material issues for the company. There is, of course, an argument that if the CEO was removed from the company as a result of prosecutory action that the company would be perceived as having a greater value.

Hence I have bought some. I thought people might find the above information useful.

johnhemming
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Re: Ferrexpo (FXPO)

#260550

Postby johnhemming » October 28th, 2019, 8:57 am


johnhemming
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Re: Ferrexpo (FXPO)

#262182

Postby johnhemming » November 5th, 2019, 8:53 am


YeeWo
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Re: Ferrexpo (FXPO)

#264085

Postby YeeWo » November 14th, 2019, 12:02 am

Just doing some non-company specific "digging" in the "Screener" section of my brokerage AC. Clearly Yields are high, SP's low?, in the mining sector: -

Code: Select all

          | Cover| Yield | SP        | P/E  | Mkt Cap
BHP Group | 1.32 | 6.18% | 1,676.80p | 12.2 | £89,272.83
Rio Tinto | 1.67 | 5.86% | 4,076.50p | 10.2 | £52,284.94
Ferrexpo  | 5.70 | 5.90% | 130.05p   |  2.9 |    £765.51
Evraz     | 4.20 | 8.50% | 366.00p   |  2.8 |  £5,283.00
- On any conventional metric Ferrexpo and Evraz are astoundingly Cheap! I'm vaguely aware of Political Risk in Russia and Ukraine, if somebody can add anymore colour I'd be grateful to read. Thanks.


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