Israel Corp. (TASE: ILCO) subsidiary Israel Chemicals Ltd. (TASE: CHIM) is continuing its record-breaking rise thanks to developments in the potash sector, the company’s core business. The share rose 3.4% yesterday, and its now five times its level of three years ago. Israel Chemicals now has a market cap of $12 billion, a third of the market cap of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA).
Yesterday’s optimism was driven by a strong financial report for the first fiscal quarter of 2008 by Mosaic Canada Colonsay ULC (NYSE:MOS), the world’s second largest potash producer. Mosaic beat the analysts’ consensus on profits, and the results boosted all potash shares, many of them to record heights, including Israel Chemicals. Israel Chemicals is the world’s sixth largest potash producer.
Mosaic also published an optimistic outlook, in which it said, “Industry inventories for North American producers of phosphates and potash continue to decline and supplies remain very tight.” This statement supports prospects of high prices in early 2008.
On the strength of latest developments in the market, Clal Finance Batucha analyst Yisca Erez raised her target price for Israel Chemicals from NIS 39 to NIS 44, about a 12% premium on yesterday’s close. She also cited in her recommendation the IPO of Russia’s JSC Uralkali (RTS:URKA), the start of negotiations for a new potash contract with China for deliveries next year, and the influence of rising prices in almost all key markets.
Erez added that the surge in leading potash stocks Potash Corporation of Saskatchewan (NYSE; TSX:POT), Mosaic, and Agrium Inc. (NYSE:AGU), all of which have risen more than Israel Chemicals, suggests that the latter will continue to narrow the gap, despite rising shipping prices and currency fluctuations, which will affect the company’s expenses.
Published by Globes [online], Israel business news - www.globes.co.il - on October 10, 2007
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