"ВТБ Капитал" понижает рекомендацию по бумагам "Уралкалия" до "Держать"
26 марта 2009 года
We are downgrading Uralkali to Hold on valuation grounds as it has risen 114% since early March and there is now only 12% upside potential to our Fair Value of USD 15.1. The stock now trades at a 2009 EV/EBITDA of 4.3x. The 20% discount to Potash Corp is probably justified given the high corporate governance risks (the issue of compensating for lost reserves has still not been resolved).
We have revised our FV from USD 14.5, as set in our initiation report Russian fertilizers: Time to Sow of 2 March 2009, to USD 15.1. Then, we suggested that Uralkali would be forced to compensate the full amount of direct flooding-related expenses (USD 600mn). However, it escaped from the flooding re-investigation in better shape: notes from a meeting headed by Alexey Kudrin and published on 10 March 2009 stated that the company would compensate only USD 220mn, with the rest being covered by the federal budget, Russian Railways, Silvinit and TGK 9.
We continue to believe that Uralkali is fundamentally a strong story and see upside risks to our assumptions. Our 2009 spot price forecast is USD 624/tonne while we have recently seen USD 750 in Brazil. Although four contracts have been signed at this level for a total volume in excess of 100,000 tonnes (two by BPC, one by K+S and another one by SQM), with another from Israel Chemicals to be confirmed, we need to see larger volumes being moved in the region to be comfortable with USD 750 as the new level. Including a price of USD 750 into our model would increase our FV to USD 18.5, implying 38% upside potential.
The limited upside and absence of near-term drivers (an important Chinese contract is likely to be signed in May-June; India might be earlier, but unlikely before the end of April) means we take a wait and see approach. Buyers in most regions are sitting on the sidelines, stocks remain high (and growing in North America) and potash companies are working at low utilisation rates (30% in 2mo09). Although we see the situation improving significantly in 2H09, with utilisation rates potentially increasing to above nominal capacity, this remains to be proved.
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