本文发表在 rolia.net 枫下论坛MGO reported Q108 EPS of $0.08; same as last year, but below our
estimate of $0.12 and consensus of $0.11. The main variance between
actual and our estimate were lower-than-expected sales volumes and lower
SOP pricing. We believe MGO will make up for the sales volumes in Q208.
While the '08 Chinese potash negotiations with BPC are unsettled and could
potentially drag into the summer, MGO's supply of potash looks secure. It
currently has 5-6 months of potassium chlorate in inventory (~8-9 months
including prepaids) and also continues to receive shipments from Russia.
MGO's Q108 gross margins returned to its low-to-mid 20% target after
falling to 16.7% in Q407 due to rising sulfur costs. With global SOP prices
continuing to move upward , we believe MGO will be able to continue to
pass on higher input costs.
Outlook for MGO's end markets is robust with production of tobacco and
fruits & vegetables expected to continue to grow. MGO's valuation remains
attractive, trading at a discount to its peers at 12.4x consensus '09 EPS
versus 15.3x for the large cap. fertilizer producers and 15.9x for HF.
Q108 A Miss - Should Make Up Volumes In Q2
Migao (MGO-SO) reported fiscal Q108 EPS of $0.08; same as last year, but
below our estimate of $0.12 and consensus ranging from $0.09 to $0.12. The
main differences between actual and our estimates were:
Lower-than-expected sales volumes: In Q108, Migao sold approximately
54,000 tonnes of core product while we had forecast 62,700 tonnes. The reason
for the discrepancy was:
• Guangdong Migao sales were negatively impacted by 3,500-4,000 tonnes
due to rail transportations issues.
• No sales from Changchun Migao, which started up in November 2007.
Changchun did not ship any product in the calendar fourth quarter in order
to take advantage of a full-year tax exemption (i.e. if Changchun sold any
product in 2007, it would be counted as the first of two tax exempt years
under the current tax program).
• Sichuan Migao sold ~18,000 tonnes in Q108 versus our estimate of 22,000
tonnes due to the lumpiness of potassium nitrate sales during the year.
We believe that the lower sales volumes are timing related and that Migao will
be able to realize these sales in the coming quarter.
Raw material/product prices: Sulfur costs were 20% higher than we had
forecast, but this was partially offset by better-than-expected by-product pricing
with hydrochloric acid and ammonium nitrate prices about 6% and 40% higher
than our estimate, respectively.
Potash Supply Looks Secure; Potential For Margin Expansion
Even with the 2008 Chinese potash negotiations with BPC still unsettled and
expectations that this could drag out until the summer, Migao’s supply of potash
raw material looks to be secure. It currently has about 5-6 months of potassium
chlorate in inventory on hand, and including the prepayments it has made for
raw material, this should give Migao a total of about 8-9 months of inventory.
In addition, Migao has renewed its supply commitment with Silvinit (SILV-RT), a
Russian potash producer outside of the BPC [Russian potash cooperative that
includes Uralkali (URKA-RT) and Belaruskali], and has been receiving shipments
from them. Migao will continue to pay the 2007 potassium chloride price of
US$235/tonne for this product until the Chinese negotiations are finalized, at
which time, Silvinit’s price will be marked to the new contract price. Until the
negotiations are settled, there is an opportunity for margin expansion for Migao
as global potassium sulfate (SOP) prices have been moving in line with the
increases in global potassium chloride pricing. SOP prices in Europe are
更多精彩文章及讨论，请光临枫下论坛 rolia.net
estimate of $0.12 and consensus of $0.11. The main variance between
actual and our estimate were lower-than-expected sales volumes and lower
SOP pricing. We believe MGO will make up for the sales volumes in Q208.
While the '08 Chinese potash negotiations with BPC are unsettled and could
potentially drag into the summer, MGO's supply of potash looks secure. It
currently has 5-6 months of potassium chlorate in inventory (~8-9 months
including prepaids) and also continues to receive shipments from Russia.
MGO's Q108 gross margins returned to its low-to-mid 20% target after
falling to 16.7% in Q407 due to rising sulfur costs. With global SOP prices
continuing to move upward , we believe MGO will be able to continue to
pass on higher input costs.
Outlook for MGO's end markets is robust with production of tobacco and
fruits & vegetables expected to continue to grow. MGO's valuation remains
attractive, trading at a discount to its peers at 12.4x consensus '09 EPS
versus 15.3x for the large cap. fertilizer producers and 15.9x for HF.
Q108 A Miss - Should Make Up Volumes In Q2
Migao (MGO-SO) reported fiscal Q108 EPS of $0.08; same as last year, but
below our estimate of $0.12 and consensus ranging from $0.09 to $0.12. The
main differences between actual and our estimates were:
Lower-than-expected sales volumes: In Q108, Migao sold approximately
54,000 tonnes of core product while we had forecast 62,700 tonnes. The reason
for the discrepancy was:
• Guangdong Migao sales were negatively impacted by 3,500-4,000 tonnes
due to rail transportations issues.
• No sales from Changchun Migao, which started up in November 2007.
Changchun did not ship any product in the calendar fourth quarter in order
to take advantage of a full-year tax exemption (i.e. if Changchun sold any
product in 2007, it would be counted as the first of two tax exempt years
under the current tax program).
• Sichuan Migao sold ~18,000 tonnes in Q108 versus our estimate of 22,000
tonnes due to the lumpiness of potassium nitrate sales during the year.
We believe that the lower sales volumes are timing related and that Migao will
be able to realize these sales in the coming quarter.
Raw material/product prices: Sulfur costs were 20% higher than we had
forecast, but this was partially offset by better-than-expected by-product pricing
with hydrochloric acid and ammonium nitrate prices about 6% and 40% higher
than our estimate, respectively.
Potash Supply Looks Secure; Potential For Margin Expansion
Even with the 2008 Chinese potash negotiations with BPC still unsettled and
expectations that this could drag out until the summer, Migao’s supply of potash
raw material looks to be secure. It currently has about 5-6 months of potassium
chlorate in inventory on hand, and including the prepayments it has made for
raw material, this should give Migao a total of about 8-9 months of inventory.
In addition, Migao has renewed its supply commitment with Silvinit (SILV-RT), a
Russian potash producer outside of the BPC [Russian potash cooperative that
includes Uralkali (URKA-RT) and Belaruskali], and has been receiving shipments
from them. Migao will continue to pay the 2007 potassium chloride price of
US$235/tonne for this product until the Chinese negotiations are finalized, at
which time, Silvinit’s price will be marked to the new contract price. Until the
negotiations are settled, there is an opportunity for margin expansion for Migao
as global potassium sulfate (SOP) prices have been moving in line with the
increases in global potassium chloride pricing. SOP prices in Europe are
更多精彩文章及讨论，请光临枫下论坛 rolia.net