Fortescue: Iron Ore Volumes Solid, Prices High

We retain our fair value estimate for no-moat Fortescue of AUD 17.30 per share after the company shipped about 49 million metric tons of iron ore in the second quarter of fiscal 2024. This was in line with our expectations and 2% below the same quarter of fiscal 2023 but 6% above the previous quarter. First-half fiscal 2024 shipments were roughly 95 million metric tons, 2% lower than last year, with shipments from its new 69%-owned Iron Bridge mine remaining immaterial. We continue to forecast sales of roughly 192 million metric tons (its share) in fiscal 2024, similar to last year. While Fortescue broadly maintained fiscal 2024 guidance, Iron Bridge shipments and costs were lowered. Iron Bridge is being affected by defective infrastructure that will require modest additional capital expenditure to fix. However, these changes are immaterial to our fair value estimate.