We Downgrade Incitec Pivot to No Moat with no Change in Fair Value
We make no change to our AUD 2.50 per share fair value estimate but remove Incitec Pivot's narrow moat. At AUD 2.85, the shares are marginally overvalued. Incitec Pivot let itself down on the capital allocation side overinvesting during the boom. It significantly expanded its business with construction of Moranbah. It is also building an ammonia plant in Louisiana, designed to take advantage of cheap U.S. natural gas prices. Capacity increases have led to oversupply of ammonium nitrate in east c...Incitec Pivot is engaged in the manufacturing and distribution of industrial explosives, industrial chemicals and fertilisers, and the provision of related service. Co.'s Asia Pacific business consists of the: Dyno Nobel Asia Pacific, which manufactures and sells industrial explosives and related products and services; Southern Cross International, which manufactures ammonium phosphates and is a distributor of its manufactured fertilizer product; and Incitec Pivot Fertilisers, which manufactures and distributes fertilizers in Eastern Australia. Co.'s Americas business comprises the Dyno Nobel Americas, which manufactures and sells industrial explosives and related products and services.
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