FMIL SP / OAJ.SI
Stronger earnings but cash returns remain the valuation test
Mining
Revenue rose 23.0% to US$39.9m and PATMI increased 55.5% to US$6.9m as concentrate sales, realised prices and cost absorption improved. Gross margin reached 63.1%. This supports higher near-term estimates, while our forecasts allow grade and mix strength to normalise.
We assume meaningful contribution from FY28, with 105,000 DMT of initial sales based on 600,000 tonnes of feed capacity, 50% utilisation and a 35% saleable yield. The project remains under construction; Mengapur copper and gold, Sabah and PNG contribute no commercial revenue in our base case.
Half-year operating cash flow was US$10.9m, but cash capex excludes substantial equipment financing. Our FY27 economic capex estimate is US$16m. Norwest adds gold-development exposure through an investment holding and does not enter operating revenue.
We retain NEUTRAL and reduce our 12-month target to S$0.20 from S$0.26, using DCF at 9.0% WACC and 2.0% terminal growth. The indicative target implies 4.8% price downside.
Ore-price weakness, lower recoveries or grades, commissioning delays and higher capital spending could reduce cash returns. Stronger realisation and successful project conversion would improve the outlook.
