IBI Investment House Ltd. today downgraded its recommendation for Israel Chemicals Ltd. (TASE: ICL) from "Buy" to "Neutral", citing weak results expected for the fourth quarter of 2012.
IBI analyst Guil Bashan says, "The financial report for the fourth quarter of 2012, which will be published in March, will be weak. The potash market volatility dived during the fourth quarter, which is a weak quarter anyway. The fourth quarter was characterized by a stagnant potash market as it waited for big contracts, which were ultimately signed in late January and early February. The first quarter will therefore show a completely different trend."
Bashan says, "Israel Chemicals is traded at close to its fair value, with a net profit multiple of 14.7 and EV/EBITDA multiple of -1 for 2013, which definitely indicate the expected improvement in the coming months and beyond.
"We estimate that potash sales will total 830,000 tons in the fourth quarter, compared with 1.38 million tons in the corresponding quarter. The average price per ton is $440, compared with $458 per ton in the third quarter and $486 per ton in the corresponding quarter. Most of the sales in the quarter were spot sales in Brazil and Southeast Asia, where prices have been falling to this level."
Published by Globes [online], Israel business news - www.globes-online.com - on February 21, 2013
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