This report is an updated version of the report published on 13 February 2025 at 3:55 PM AEDT.

Champion Iron Limited (ASX: CIA)

Champion Iron Limited (ASX: CIA) is an iron ore exploration and mining company focused on the production of high-grade iron ore concentrate. Through its wholly owned subsidiary, Quebec Iron Ore Inc., CIA operates the Bloom Lake Mining Complex located in Québec's Labrador Trough.

Recommendation Rationale - SELL at AUD 6.005

• Decline in Production – Quarterly production for the three-month period ended 31 December 2024 was 3.6 million wmt of high-grade 66.3% Fe concentrate, representing a 10% decrease compared to the same period last year.
• Decline in Earnings: For the three-month period ended 31 December 2024, EBITDA decreased by 64% compared to the same period last year, while net income fell by 99% year-on-year.
• Trading Around Resistance: CIA’s share price surpassed its R1 level recommended on 6 February 2025. Its 14-Day Relative Strength Index (RSI) is showing a reading of ~60.66, which indicates the stock is approaching overbought zone and may face resistance before moving higher.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (Price/Earnings, EV/EBITDA, EV/Sales, Price/Book and Price/Cash Flow) are higher than the median of the materials sector.
• Risks - As an iron ore producer, CIA is highly sensitive to fluctuations in global iron ore prices, with downturns potentially impacting revenue and profitability. The company also faces operational, environmental, regulatory, and geopolitical risks.

CIA Daily Price Chart

 (Source: REFNIITIV, Analysis by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (FY Mar'26E) (Illustrative)

CIA is expected to trade at a slight discount to its peers due to a decline in revenue, earnings, and production in 3QFY25, delays in the DRPF project, equipment breakdown impacts, and other factors. For conducting the valuation, the following peers have been considered: Sims Ltd (ASX: SGM), BlueScope Steel Ltd (ASX: BSL), Fortescue Ltd (ASX: FMG) and others.

Considering that the stock has crossed its R1 level, the rally in share price movement, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 6.005, as of 13 February 2025, at 3:46 PM AEDT.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 13 February 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.