Jun
20
Uralkali: Prices keep growing - June 20, 2008
Filed Under Uncategorized |
In just 2 days Uralkali’s shares have increased by 8.3% and 6.8% respectively. Company’s capitalization according to Tuesday results formed 33.57 mn USD. Since the beginning of the year company’s securities growth formed 90%.
The main reason to propel quotes growth was “Belorusskaya Kaliynaya Kompaniya”, Uralkali’s representative, which signed a contract of potash chloride export with Brazil at the price of 1000 USD per t. The previous price was lower and formed 610 USD per t (the contract was signed in June and the shipments will be provided starting with August).
Let us remind you that long-term contract the shipments volume in Brazil will form 1.12 mn t over the current year. It is less than 21% of all Uralkali’s sales. In 2016 company’s sale volume may form 2.41 mn t.
Also, the 2nd reason to drive the growth of company’s securities is a high demand on potash chloride in one of the main trading center of this product – Vancouver. The price of potash chloride expanded from 550.5 USD per t to 587.5 USD per t.
Due to the market situation changes, we have reviewed company’s model, upgraded it in accordance with the current product prices in South America, increasing sales prices by 31% in 2008 and long-term price forecast by 26%.
As the result, the new fair price of Uralkali’s shares formed 17.83 USD against 14.2(+25.5%) USD, which was forecasted earlier, demonstrating 11.83% growth potential. Due to the potential growth limitation, we change our recommendation from “BUY” to “ACCUMULATE” on company’s shares.
Uralkali: Prices keep growing - June 20, 2008 (PDF)