TSX:CIA - Post Discussion
Post by
retiredcf on May 31, 2023 8:53am
RBC
May 30, 2023
Champion Iron Limited
FQ4 financial results as expected with production pre-released
TSX: CIA | CAD 5.43 | Outperform | Price Target CAD 9.00
Sentiment: Neutral
Our view: We expect a neutral reaction from Champion shares to FQ4 financial results that were mixed compared to estimates on pre-released production, sales, and operating costs (details here). Results were slightly below our estimates, as stronger realized pricing was offset by higher opex; however, EBITDA was 6% above consensus. Champion remains focused on the Phase II expansion consistently reaching nameplate capacity of 15Mt/year as the expanded mining fleet ramps up, although it notes that sales could lag production in the near term as it awaits delivery of additional locomotives to increase rail capacity. The company continues to advance the DR pellet feed project (with $52M budgeted for initial work) and feasibility studies on the Kami project and Pointe- Noire re-commissioning are expected in the second half of CY2023.
FQ4 financial results marginally below estimates: The company reported adj. EPS of $0.17, below our estimate of $0.22 and consensus of $0.18. EBITDA for the quarter was $196M, below our estimate of $214M but above consensus of $185M. Realized iron ore pricing came in at $150/dmt, above our forecast of $146/dmt, as pricing benefited from $14M of positive provisional pricing adjustments (~US$3/dmt). Champion also announced the semi-annual $0.10/sh dividend as expected.
Liquidity update: Champion ended the quarter with $327M in cash and equivalents, up from $166M at the end of last quarter, with total liquidity of $674M. Long-term debt was $475M at the end of the quarter, up from $449M last quarter. Champion generated $165M in OCF in the quarter before working capital changes, vs. our estimate of $146M. Capex over the quarter was $25M vs. our estimate of $32M.
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