Merrill Lynch analyst Haim Israel today reiterated his “Buy” recommendation for Israel Chemicals Ltd. (TASE: CHIM) raised his target price by NIS 3 to NIS 30. IBI Investment House Ltd. gives the company the same target price. Israel Chemicals is a subsidiary of Israel Corp. (TASE: ILCO).
Merrill Lynch says, “Not normally prominent on Israel Chemicals investors’ radar screen, the phosphate fertilizers business is starting to get itself noticed, with prices of phosphate, not to mention margins for producers, going through the roof in the past couple of weeks. For example, DAP (diammonium phosphate) fertilizers’ prices rose 35% in four weeks to $410/mt, while production costs increased by only $3.”
This means that Israel Chemicals will make a profit of about $97 per ton of DAP produced.
Merrill Lynch adds, “External sales of fertilizers and phosphates are expected to reach $580 million (up from our original projections of $525 million versus projected sales of $512 million in 2006. We have modeled phosphate fertilizer prices remain at current levels for the remainder of the year. On the basis of these assumptions, we have updated our Israel Chemcials’ 2007 EBITDA estimate and net profit projection to $926 million and $571 million respectively, up from $889 million and $525 million.”
Merrill Lynch, “On top of the upbeat phosphate market, it seems as if the potash prices that were set in China have not influenced market sentiment, as prices in Brazil and the US continue to go up.”
Israel Chemicals will publish its financial reports for the fourth quarter of 2006 and the year as a whole next week.
Published by Globes [online], Israel business news - www.globes.co.il - on March 22, 2007
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