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IPL - INCITEC PIVOT LIMITED


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IPL still going up, now near the post covid highs.

Still a long way to go to pre covid 52 week high, which is a little surprising since the big increases in mining activity should keep the explosives side going going, and the really good Autumn and spring breaks should boost the fertiliser side of things.

Mick

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The pandemic has severely hit Dyno Nobel Americas’ ammonium nitrate volumes with the impact most pronounced in coal/metals markets.

 

Base and precious metals volumes were impacted by mine closures in Canada while iron ore production was cut due to reduced US steel demand. US coal markets were impacted by the significant drop in gas prices.

 

Incitec Pivot highlights base and precious metals volumes are recovering along with the recent increase in the US gas price hinting a recovery in coal volumes.

 

The broker notes Incitec’s earnings are sensitive to changes in the global fertiliser prices. These prices have increased by circa 20% and 15% and the company has a positive outlook underpinned by better global agricultural conditions and trade flow redirection.

 

UBS retains its Buy rating with a target price of $2.40.

 

Sector: Materials.

 

Target price is $2.40.Current Price is $2.25. Difference: $0.15 – (brackets indicate current price is over target). If IPL meets the UBS target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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from our own sharecafe----- good defensive stock i reckon.

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  • 9 months later...
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The federal government and fertiliser manufacturer Incitec Pivot have struck an agreement to significantly increase the local production of urea used in the diesel exhaust fluid AdBlue.

The company will design, trial and, once tests are successful, scale up manufacturing of significant quantities of technical grade urea to supply the domestic market.

In November, Incitec Pivot announced plans to shut down its Gibson Island fertiliser plant in Brisbane by December 2022.

The new deal has brought much needed relief for many in the industry.

It is good news that there is an Australian option to produce urea locally, Simon Henry, chief executive of DGL Group, the parent company of Australia's largest AdBlue producer AUSblue, told the ABC.

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David Thornton: Hello and welcome to Buy Hold Sell. I am your host, David Thornton. It has been a pretty wild ride for stocks in 2022, but the ASX 200 is holding up pretty well.

Today, we are going to discuss [some] the best performing stocks in the 200 .... For that, we are joined by Anthony Aboud from Perpetual, and Sean Fenton from Sage Capital.

David Thornton: Okay. The third top performer, Incitec Pivot. Currently trading at $3.58, and it is planning to split its explosives and fertilisers business. Buy, hold or sell, Anthony?

Anthony Aboud (BUY): I have still got a buy. I like it. I think there are two things to have occurred which are going to be a bit more sustainable as a result of lack of supply, but also as a result of Russian invasion of Ukraine, is elevated energy and food costs. And second derivative of food is fertiliser. We think that fertiliser is not a bad place to be over the medium term. Secondly, we like the demerger.

We think that the volatility of the fertiliser earnings hides how good a business the explosive business is. It operates in a lot of duopolies with Orica. And so we think it will get a rerating and we do think then two bite size pieces. One of them may be quite attractive from an M&A perspective.

David Thornton: Sean, buy, hold, sell?

Sean Fenton (BUY): Yeah, I generally agree it is a buy. There could be a bit of entry point coming up, but trading wise, there are a few pressures there. They have done really well from high ammonia nitrate, urea prices, ammonia prices with cheap gas out of the US, where their Waggaman plant is, that is being arbitraged away.

The Europeans are buying all the gas cargoes they can out of the US, and coming out of winter in the northern hemisphere, you have also seen some of those European gas prices come down. Margins have come down across the nitrogen part of the business. You are seeing some resistance to very high fertiliser prices in Brazil and in Australia. Bit of demand destruction there.

But I agree with Anthony, the separation of the business should be value accretive and we’re not in a situation where we have sold food inflation, food scarcity. We do see longer term strong demand there. They have just got to really step up the operational performance of that Waggaman plant, the AN plant in Louisiana.

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