Last week, ASX materials stock Champion Iron Ltd (ASX: CIA) released its third quarter FY2026 result.
The miner delivered record quarterly sales and income for the three months to 31 December 2025.
It reported:
- Quarterly revenue of $472 million, up 30% year-over-year
- Net income of $65 million; earnings per share of $0.12
- EBITDA of $152 million, up 73% from the prior-year period
- Record iron ore sales of 3.9 million dry tonnes, an 18% increase
- C1 cash cost per tonne lowered to $73.9, down 6% from a year ago
- Cash balance (excluding restricted funds) of $245 million at quarter-end
However following these results, investors exited their positions, with Champion Iron losing 3.13% on Friday.
ASX materials stocks have been firing over the last year.
The S&P/ASX 200 Materials (ASX: XMJ) is up 40% in that span.
However Champion Iron has largely missed out on this bull market, rising just 5.95% in that same period.
Image source: Getty Images
Fresh analysis from Bell Potter
The team at Bell Potter released a new report on this ASX materials stock on Friday.
Key takeaways from the previous quarter from the broker included:
- Production & sales: Strong quarterly production and record sales, with higher plant recoveries offsetting harder ore; improved rail performance drove a material reduction in site and port inventories.
- Pricing: Realised prices broadly stable vs index, though still impacted by higher exposure to discounted spot iron ore sales ahead of DRPF term contracts.
- Costs: Unit costs improved quarter-on-quarter, reflecting lower maintenance subcontractor costs and fixed-cost leverage from higher volumes.
- Cash flow: Cash declined C$80m QoQ to C$245m; operationally near breakeven pre-growth capex and dividends, with working capital a drag due to higher receivables and lower payables.
The broker also said a critical decision during the previous quarter was the announcement of a US$289m transaction agreement to acquire Rana Gruber ASA.
Rana Gruber is a producer of high-grade iron ore operating in Norway's Dunderland Valley with production of over 1.8Mtpa and five year average trailing EBITDA of US$80m (US$50m in 2024).
The transaction is expected to close by mid-2026 and will be funded via a US$100m private placement to investment group Caisse de dépôt et placement du Québec and a fully committed US$150m term loan with Scotiabank.
Bell Potter said transaction benefits include increased scale, diversification, blending capabilities, and EBITDA and cash flow per share accretion.
Hold recommendation
This ASX materials stock closed trading last week at $5.88 per share.
In Friday's report, Bell Potter maintained its hold recommendation.
The broker also lowered its price target to $5.55.
Based on this rating it appears Friday's sell-off was justified as this stock is trading slightly above fair value.
The price target from the broker indicates a downside of approximately 5.6%.
