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IPL - INCITEC PIVOT LIMITED


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Any chance of this article being positive for IPL sp - because right now it needs all the luck it can get.........

 

 

Agriculture shares may rise on China demand-Barron's

Sun Oct 18, 2009 5:43pm EDT

 

NEW YORK, Oct 18 (Reuters) - Shares of agricultural companies are likely to see increased investment as China seeks to secure enough grain to meet coming explosive growth in demand, according a report in Barron's.

 

As China becomes more industrialized its citizens are likely to consume more protein, including meat, which means higher grain demand, the business weekly said in its October 19 issue. .

 

Citing a report from Societe Generale, the paper said several companies are below what is considered to be fair book value. They include Golden Agri-Resources (GAGR.SI), Chaoda Modern Agriculture (0682.HK), Yara International (YAR.OL), Incitec Pivot (IPL.AX), Global Bio-chem (0809.HK), and Agrium (AGU.TO). (Reporting by Franklin Paul; Editing by Steve Orlofsky)

 

 

http://www.reuters.com/article/marketsNews...834429820091018

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How easy is it to work a mention of Warren Buffet into a spray about the prospects of Incitec Pivot? As of this month, so easy. :rolleyes:

 

Here goes:

 

I see that earlier this month Mr Buffet made the biggest investment ever - US$26b - by buying out the 77% of a big US railroad company that he did not already own.

 

http://online.wsj.com/article/SB1000142405...1915147218.html

 

And what is the main product that that railroad company moves? Coal.

 

In third-quarter 2009, coal shipments accounted for roughly 25 percent of Burlington Northern's total revenue, according to Marketwatch. It shipped 604,000 carloads of coal in the quarter, more than any other single category. And Burlington Northern hauled 297 million tons of coal last year, enough to supply roughly 10 percent of the country's electrical needs.

 

http://www.dailyfinance.com/2009/11/04/war...es-in-his-long/

 

And what does IPL do for a quid? fertilisers, yes, but they are also number one in the US for explosives, much of which is sold to the coal industry. In fact just under half of IPL's earnings come from its explosives business.

 

The Company holds a portfolio of recognised and trusted brands and is:

 

  • Number One supplier of fertilisers in Australia;
  • Number One supplier of explosives products and services in North America - the largest industrial explosives market in the world; and
  • Number two supplier of explosives products and services in Australia - the third largest industrial explosives market in the world.
http://www.incitecpivot.com.au/company_profile.cfm

 

Yes I know that there are plenty of possible reasons for Wazza to invest in infrastructure but the bottom line is that he would not have done the deal unless Charlie Munger had given him the thumbs up in terms of an investment proposal. So at least Warren and Charlie think that IPL have invested into a sector with long term potential.

 

Anyway, I guess we are due a half yearly report in the near future and we'll see how much damage has been done in the last 6 months.

 

 

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It seems, a few others begin to "know" that IPL could be worth more.

The recent two signals (pink) suggested more downside - which promptly came about;

today's green signal, following a Bullish Divergence in MACD, suggests this time may be "different".

If it manages to stay above $2.78 tomorrow, I may get some. Target $3.45.

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John Durie has some comments on IPL in today's Oz newspaper.

 

SOMETIMES the market gets it wrong. Yesterday's ebullient response to a poor Incitec Pivot result was a case in point, with the share price rising 6.5 per cent to $2.79 when it should have fallen by that amount. The underlying numbers came in as expected but almost everything else was down.

 

New boss James Fazzino's commentary was as cautious as one could expect from a new boss who derives most of his income in US dollars.

 

Incitec's share price rose to more than three times present levels not so long ago, when fertiliser prices rocketed to $US921 a tonne, compared with $US366 a tonne now.

 

So the question is whether the company has great management or is just a play on the commodity cycle.

 

The Valiant-obsessed Fazzino was the No 2 behind old boss Julian Segal, and the market consensus now seems to favour the earlier boss, which makes it hard to maintain market support.

 

Last year's overpriced acquisition of Dyno Nobel was forgiven because it was paid for in overpriced Incitec scrip, but that has also allowed the company to hide behind the market slump.

 

It is using a $3.3 billion purchase price on the deal, which makes the $490 million writedown look almost acceptable, being $280m on changes to discount rates used and another $210m for the weak US market.

 

IPL is highly dependent on both currency and commodity prices, so the slump in the US dollar and US demand has hit it hard, but it is claiming goodwill figures for the Dyno deal that exceed the purchase price, measured in today's currency and market values.

 

Fazzino won't commit to finishing the Moranbah ammonia plant, in part because of market uncertainty. But you can tell he is itching to get on the front foot after his abysmal start to the top job due to factors beyond his control.

 

Shareholders have faced a cut in the dividend payout ratio from 55 per cent to 20 per cent of earnings, a fall in returns from 25 per cent to minus 43 per cent, and - despite a cut in debt - a fall in interest cover due to the profit slump.

 

This same slump has delayed returns on the first-class company improvement program, Velocity.

 

Fazzino knows the market will not be forgiving forever and, with so much beyond his control, the best he can do is talk up company values and a customer revolution while praying for a better US economy.

 

http://www.theaustralian.com.au/business/o...f-1225798353577

 

 

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