PhosAgro - Finding Fertile Ground
A confluence of factors has helped push phosphate prices higher in defiance of the traditional off-season slump and new capacity from market leaders. Chief among these factors are the recent rise in raw material prices, anecdotal evidence of supply disruption in China and expectations of strong demand for phosphate. Best positioned to benefit from these trends are vertically integrated producers such as PhosAgro. Meanwhile, better than expected progress on growth projects, together with a weaker local currency, should add up to strong earnings growth next year for PhosAgro, with EBITDA likely exceeding $1.2 bln (up more than 25% y-o-y). We increase our target price from $17.45 to $19.60 per GDR and upgrade the stock from HOLD to BUY.
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.
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