Company Update: 13 May 2026
Record volume delivered, but upside now more balanced
- FY2026 validates execution but also resets the volume base. Fortress reported record FY2026 revenue of US$64.3m, up 14.2% y/y, driven by record sales volume of 724,439 DMT, up 14.5% y/y. The result was ahead of our previous FY2026 revenue estimate of US$58.2m and volume estimate of c.650k DMT, mainly because Bukit Besi ramped faster than expected. FY2026 was a stronger operating base but a new high-growth starting point, as Bukit Besi appears closer to mature utilisation at c.60k DMT per month.
ASP Resilience Helped FY2026 while Maintain Conservative Medium-term Pricing Assumptions
FY2026 realised ASP was US$88.66/DMT, broadly flat y/y despite a softer benchmark environment. This was better than our previous caution around realised pricing, but we still expect Fortress to remain highly sensitive to IODEX and realisation factor movements. Our updated ASP assumptions are now US$87.0/DMT in FY2027, US$89.2/DMT in FY2028 and US$91.5/DMT in FY2029, implying only measured recovery rather than a return to historical premium pricing.
Downgrade to NEUTRAL with Lower TP of S$0.26
Our updated blended valuation, based on a 50:50 DCF and EV/resource approach, gives a new fair value of S$0.26. The downgrade reflects more limited upside after FY2026 outperformance, lower near-term FCF from heavier reinvestment, and still-limited visibility on commercial Mengapur contribution. We remain constructive on the asset base, but believe the risk-reward is now balanced.
FY26 Results Update
FY2026 revenue increased 14.2% y/y to US$64.3m on a record sales volume of 724,439 DMT. Gross profit rose 11.8% y/y to US$37.3m, while gross margin eased to 58.1% from 59.3% as average unit cost increased 2.7% to US$33.81/WMT. EBITDA increased 19.0% y/y to US$19.3m and NPAT rose 64.7% y/y to US$9.8m, helped by higher volume, resilient ASP and absence of the US$3.0m non-financial asset impairment recorded in FY2025. Operating cash flow also improved to US$19.1m, while cash and bank balances increased to US$14.6m as on 28 February 2026.
Against our prior 2Q26 model, the key discrepancy was volume rather than pricing. FY2026 revenue of US$64.3m came in above our previous US$58.2m forecast, and actual sales volume of 724k DMT was above our prior c.650k DMT forecast. Realised ASP of US$88.66/DMT was close to our implied ASP assumptions, while unit cost was better behaved than the sharp 1H FY2026 cost spike initially suggested. The earnings beat therefore does not change our medium-term commodity view, but it does reset Bukit Besi to a higher volume base.
Valuation & Action
We downgrade Fortress from OUTPERFORM to NEUTRAL and lower our target price to S$0.26. Our DCF valuation now implies US$0.17 per share, while our EV/resource valuation implies US$0.24 per share. A 50:50 blend gives US$0.20 per share, which translates to S$0.26 using an FX rate of 1.27. The lower target price reflects more conservative FCF assumptions, higher reinvestment needs and a slower risk-weighted Mengapur contribution despite FY2026 operational outperformance.
