Key message: We update our forecasts for the very strong iron ore prices as FY21 is now over. A higher medium-term iron ore price outlook increases our earnings forecasts.
- Afrimat’s FY21 year is complete, and we update our forecasts for the higher-than-expected iron ore prices. A higher medium-term iron ore price outlook increases our earnings forecasts.
- The Construction Materials business has also experienced a strong increase in demand in 2H FY21 as the construction materials market in general experiences a boom since the Covid lockdowns.
- Industrial Minerals has also experienced a recovery in demand, with AMSA and Scaw demand increasing.
- We update our FY21 and FY22 HEPS forecasts to 591c (from 474c) and 551c (from 254c) as we move away from the previous long-term USD65c price for iron ore from FY22 to USD110c in FY22 and USD80c in FY23).
- We adjust our Target Price to R43.76 (from R41.00).
- Should we use spot iron ore prices for Demaneng (US$165/tonne for iron ore fines), our valuation increases to R88.67 per share.
- Afrimat continues to look for further acquisitions following the UCP and Coza transactions. Given the strong demand in Construction Materials and Industrial Minerals there is scope for organic growth.