PhosAgro - Organic Growth Set to Continue, But Prices Are Weak; HOLD
PhosAgro's 2020-25 investment program should deliver a 4% fertilizer output CAGR in 2019-25, with an average project IRR of 11-22% at spot fertilizer prices, or 23-37% assuming a pickup of around 10% in DAP prices starting in 2020. We think the recent correction in raw material prices and subsequent $50-70/tonne drop in the costs of marginal DAP producers, coupled with aggressive marketing by OCP Group, are likely to keep DAP prices depressed over the next 6-9 months. This means that PhosAgro's short-term FCF generation and dividend capacity are likely to be limited. We downgrade the stock to HOLD and reduce our GDR target price to $13.60.PhosAgro is a producer of phosphate-based fertilizers. As of Dec 31 2014, Co. had two segments: Phosphate-based products, which includes mainly production and distribution of ammophos, diammoniumphosphate, sodium tripoly phosphate and other phosphate based and complex (NPK) fertilisers on the factories located in Cherepovets, Balakovo and Volkhov, and production and distribution of apatite concentrate extracted from the apatite-nepheline ore, which is mined and processed in Kirovsk; and Nitrogen-based products,which includes mainly production and distribution of ammonia, ammonium nitrate and urea on the factory located in Cherepovets.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.