UBS remains bullish on Israel Chemicals

Investor interest in Israel Chemicals will focus more on bromine as potash price hikes seem less likely.

UBS reiterates its "Buy" recommendation for Israel Chemicals Ltd. (TASE: ICL) with a target price of NIS 50, on the grounds that while industry sentiment is positive on potash in turns of volume, price increases seem less likely, across the industry. As for Israel Chemicals, investors' interest will likely turn to its bromine business.

UBS analyst Roni Biron gives six reasons for his positive stance on Israel Chemicals. In the potash market, the company has strong access to key markets and has supply agreements with India and China for the delivery of two million tons of potash; the company's potash inventory is 2.58 million tons; it benefits from low production, freight, and royalties costs; and it benefits from low depletion, political, and operational risks. In the bromine market, the company has a leading position and significant potential.

Finally, Israel Chemicals has a healthy balance sheet with about 70% of revenue returned to investors on a quarterly basis.

Biron predicts that Israel Chemicals will post a net profit of $770.4 million ($0.61 per share) on $5.51 billion revenue in 2010, and a net profit of $1.04 billion ($0.82 per share) on $5.95 billion revenue in 2011.

Israel Chemicals' share price rose 1.1% by early afternoon today to NIS 44.40.

Published by Globes [online], Israel business news - - on June 20, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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