Argonaut | The Natural Choice in Resources

Morning Notes

US stocks rose overnight after the Federal Reserve’s meeting meetings failed to change views on the central bank’s policy stance. The Dow Jones and S&P 500 both edged 0.2% higher to 25,954 and 2,785 respectively;The UK and EU are edging towards a new compromise on Brexit despite problems mounting for Prime Minister Theresa May, with lawmakers leaving her party and ministers planning to challenge her in a crunch vote next week;Copper extended its gains overnight, reaching an eight-month high amid concerns of supply cuts from India, Peru and Africa. Copper rose 1.3% to $US 6,428/t;Global oil prices edged higher overnight following comments from Saudi Energy Minister Khalid al-Falih who believed the oil market would be balanced by April and there would be no gap in supplies due to US sanctions on Iran & Venezuela. Brent rose 1.1% $US 67.19;Aluminium climbed overnight following concerns over supply tightness, with global output falling 3.5% to 171,000 tons a day and Chinese production also down 5.4% a day from December. Aluminium rose 1.1% to $US 1,849/t

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Latest Research

Fortescue Metals (FMG) reported H1 FY19 results with revenue of US$3.5bn, EBITDA of US$1.6bn and a NPAT of US$644m (up 10%, 21% and 227% respectively on H2 FY18). The better result was driven by 18% higher iron ore price of US$47/dmt, but 4% higher C1 cash costs and a 3% reduction in sales. Cash and cash equivalents increased by 11% to $962m and gross debt remained unchanged HoH. The big surprise was the interim dividend hike to 19cps (from 11cps) representing a payout ratio of 65% and an additional special dividend of 11cps. We forecast an additional 30% upside in NPAT in the 2H as the effect of the spike in iron ore prices take effect. The market remains on a bullish iron ore, but bearish steel macro trend which should provide short term tail-winds for FMG, but longer term we continue to believe that iron ore prices will pull back.

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Latest News

Argonaut is pleased to announce the successful $12.5 million Initial Public Offering (“IPO”) on the ASX of Stealth Global Holdings Ltd (“Stealth” or “the Company”). Stealth is a fast-growing sales and distribution group supplying safety, industrial, workplace and healthcare consumable products and customised supply solutions to business customers across the resources, engineering, transport and general industrial sectors.

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