vk.com/id446425943
PhosAgro – BUY
Renaissance Capital
6 February 2019
Metals & Mining
Figure 103: Phosagro, RUBmn (unless otherwise noted)
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Phosagro |
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PHOR:LI |
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Target price, $: |
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16.0 |
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Market capitalisation, $mn: |
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5,012 |
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Share price, $: |
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13.5 |
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Enterprise value, $mn: |
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6,848 |
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Potential 12-month return: |
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26.5% |
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Dec-YE |
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2016 |
2017 |
2018E |
2019E |
2020E |
Dec-YE |
2016 |
2017 |
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2018E |
2019E |
2020E |
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Income statement |
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Balance sheet |
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Revenue |
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187,742 |
181,351 |
237,431 |
271,427 |
280,521 |
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Net operating assets |
190,254 |
217,875 |
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235,569 |
248,585 |
253,555 |
EBITDA |
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72,365 |
51,263 |
76,892 |
94,645 |
97,494 |
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Investments, net of rehab provision |
3,282 |
352 |
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341 |
341 |
341 |
EBIT |
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61,598 |
35,979 |
54,983 |
71,712 |
73,479 |
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Equity |
88,284 |
98,113 |
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115,594 |
140,582 |
169,377 |
Equity accounted investments |
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140 |
287 |
-565 |
359 |
367 |
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Minority interest |
137 |
129 |
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184 |
185 |
186 |
Net interest |
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-3,773 |
-6,365 |
-5,344 |
-4,269 |
-3,729 |
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Net debt |
105,115 |
119,985 |
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120,131 |
108,159 |
84,333 |
Taxation |
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-15,041 |
-8,711 |
-7,066 |
-13,560 |
-14,023 |
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Balance sheet ratios |
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Minority interest in profit |
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-2 |
2 |
-56 |
-5 |
-6 |
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Profit for the year |
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59,884 |
25,333 |
28,734 |
54,236 |
56,088 |
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Gearing (net debt/(net debt+equity)) |
54.4% |
55.0% |
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51.0% |
43.5% |
33.2% |
Earnings per GDR, USc |
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227 |
111 |
117 |
209 |
213 |
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Net debt to EBITDA |
1.5x |
2.3x |
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1.6x |
1.1x |
0.9x |
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RoCE |
35.4% |
17.5% |
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24.1% |
29.5% |
29.2% |
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Thomson Reuters consensus |
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156 |
217 |
226 |
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RoIC (after tax) |
29.2% |
14.6% |
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18.6% |
23.6% |
23.3% |
Dividend per GDR declared, USc |
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95 |
55 |
81 |
105 |
105 |
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RoE |
80.8% |
27.2% |
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26.9% |
42.3% |
36.2% |
Thomson Reuters consensus |
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95 |
103 |
106 |
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Cash flow statement |
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Income statement ratios |
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Operating cash flow |
61,045 |
34,743 |
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60,145 |
79,782 |
80,997 |
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EBITDA margin |
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39% |
28% |
32% |
35% |
35% |
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Capex (net of disposals) |
-40,246 |
-35,918 |
-35,089 -35,500 |
-27,257 |
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EBIT margin |
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33% |
20% |
23% |
26% |
26% |
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Other cash flows |
8,822 |
3,235 |
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-7,339 |
359 |
367 |
EPS Growth |
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64% |
-58% |
13% |
89% |
3% |
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Free cash flow |
29,620 |
2,060 |
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17,716 |
44,640 |
54,108 |
Dividend payout ratio |
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42% |
49% |
70% |
50% |
49% |
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Equity shareholders' cash |
28,024 |
-107 |
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13,452 |
41,220 |
51,120 |
Input assumptions |
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Dividends and share buy-backs |
-27,974 |
-14,763 |
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-13,598 |
-29,248 |
-27,293 |
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357 |
358 |
421 |
434 |
429 |
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Surplus (deficit) cash |
50 |
-14,870 |
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-146 |
11,972 |
23,827 |
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DAP, $/t |
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Cash flow ratios |
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MAP, $/t |
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344 |
352 |
415 |
434 |
434 |
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NPK 16-16-16, $/t |
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324 |
321 |
318 |
340 |
347 |
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Working capital turnover, days |
52 |
75 |
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64 |
56 |
57 |
Ammonia nitrate, $/t |
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172 |
199 |
191 |
200 |
228 |
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FCF yield |
6.6% |
0.5% |
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4.1% |
10.2% |
13.1% |
Urea, $/t |
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202 |
220 |
251 |
263 |
269 |
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Equity shareholders' yield |
8.1% |
0.0% |
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4.3% |
12.6% |
15.6% |
RUB/$ |
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67.0 |
58.3 |
62.8 |
67.0 |
68.0 |
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Capex/EBITDA |
55.6% |
70.1% |
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45.6% |
37.5% |
28.0% |
Sales volumes, kt |
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Cash conversion |
0.5x |
0.0x |
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0.5x |
0.8x |
0.9x |
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Valuation |
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DAP/MAP |
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2,696 |
2,964 |
2,972 |
3,210 |
3,210 |
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$/GDR |
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NPK |
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2,044 |
2,499 |
2,671 |
2,780 |
2,780 |
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DCF fair value and calculation of target price |
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RUBmn |
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NPS |
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517 |
410 |
481 |
518 |
518 |
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Operating value |
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536,128 |
20.6 |
Other phosphates |
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572 |
627 |
647 |
513 |
513 |
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Financial instruments as at 31 December 2017 |
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352 |
0.0 |
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Ammonia nitrate |
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376 |
476 |
541 |
533 |
533 |
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Enterprise value |
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536,480 |
20.6 |
Urea |
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1,019 |
1,140 |
1,601 |
1,559 |
1,633 |
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Net debt as at 31 December 2017 |
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-119,985 |
-4.6 |
Phosphate rock |
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2,448 |
2,732 |
2,884 |
2,867 |
2,867 |
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Minority interest |
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-129 |
-0.0 |
Total les lumes |
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10,641 |
11,849 |
12,774 |
12,979 |
13,053 |
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Cash used in share buy-backs during 2018E |
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0 |
0.0 |
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NPK equivalent sales |
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8,011 |
9,018 |
9,732 |
10,035 |
10,092 |
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Equity value |
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416,366 |
16.0 |
Volume growth |
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8.7% |
12.6% |
7.9% |
3.1% |
0.6% |
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Rounded to |
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16.0 |
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Share price on 1/2/2019 |
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13.5 |
Contribution to FY18E revenue |
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Expected share price return |
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18.8% |
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Plus: expected dividend yield |
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7.7% |
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Total implied one-year return |
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26.5% |
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Share price range, $: |
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12-month high on 23-2-2018 |
16 |
12-month low on 13-8-2018 |
12 |
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Other |
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Price move since high |
-18.0% Price move since low |
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14.0% |
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Nitrogen |
4% |
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Calculation of WACC |
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15% |
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WACC |
12.0% |
Cost of debt |
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7.0% |
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Risk-free rate |
7.0% |
Tax rate |
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20% |
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Equity risk premium |
6.0% After-tax cost of debt |
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1.7% |
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Beta |
1.30 |
Debt weighting |
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30% |
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Cost of equity |
14.8% |
Terminal growth rate |
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4.0% |
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Valuation ratios |
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Dec-YE, $mn |
2016 |
2017 |
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2018E |
2019E |
2020E |
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Phosphate |
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P/E multiple |
5.8x |
12.4x |
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11.0x |
6.0x |
5.8x |
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Dividend yield |
7.2% |
4.0% |
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6.4% |
8.3% |
8.5% |
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81% |
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EV/EBITDA |
6.2x |
8.5x |
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5.7x |
4.6x |
4.2x |
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P/B |
3.9x |
3.2x |
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2.7x |
2.3x |
1.9x |
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NAV per share, RUB |
682 |
758 |
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893 |
1,086 |
1,308 |
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NAV per GDR, $ |
3.4 |
4.3 |
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4.7 |
5.4 |
6.4 |
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Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
70
vk.com/id446425943
ArcelorMittal South Africa – HOLD
Figure 104: ArcelorMittal SA, ZARmn (unless otherwise noted) |
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ArcelorMittal South Africa |
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ACLJ.J |
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Market capitalisation, ZARmn: |
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3,944 |
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Enterprise value, ZARmn: |
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4,508 |
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Dec-YE |
2016 |
2017 |
2018E |
2019E |
2020E |
Income statement |
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Revenue |
32,737 |
39,022 |
44,259 |
40,138 |
40,110 |
EBITDA |
190 |
-315 |
3,178 |
1,358 |
1,682 |
EBIT |
-1,092 |
-1,220 |
2,463 |
567 |
869 |
Equity accounted income |
129 |
139 |
137 |
0 |
0 |
Net interest |
-700 |
-1,441 |
-1,748 |
-644 |
-477 |
Tax |
-19 |
-2 |
-223 |
22 |
-110 |
Profit (loss) for the period |
-4,706 |
-5,128 |
-1,028 |
-56 |
283 |
Headline profit (loss) |
-2,589 |
-2,671 |
628 |
-56 |
283 |
HEPS, ZAc |
-244 |
-205 |
57 |
-5 |
26 |
HEPS (Consensus), ZAc |
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70 |
42 |
56 |
DPS declared, ZAc |
0 |
0 |
0 |
0 |
0 |
Income statement ratios |
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EBITDA margin |
1% |
-1% |
7% |
3% |
4% |
EBIT margin |
-3% |
-3% |
6% |
1% |
2% |
HEPS growth |
82% |
16% |
128% |
-109% |
605% |
Dividend payout ratio |
0% |
0% |
0% |
0% |
0% |
Input assumptions (steel) |
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Iron ore - (62% Fe, CIF China) $/t |
58 |
71 |
66 |
75 |
67 |
Hard coking coal, $/t |
144 |
188 |
206 |
178 |
161 |
Steel sales realisations, $/t |
523 |
665 |
704 |
582 |
577 |
EBITDA per tonne, $/t |
3 |
-6 |
52 |
21 |
26 |
Capex/tonne, $ |
33 |
23 |
20 |
19 |
25 |
FCF/tonne, $ |
-51 |
-35 |
67 |
-9 |
2 |
$/ZAR |
14.70 |
13.31 |
13.24 |
14.31 |
14.14 |
Sales volumes, kt |
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Domestic sales |
3,275 |
3,302 |
3,483 |
3,523 |
3,559 |
Export sales |
812 |
955 |
1,098 |
1,009 |
1,061 |
Total sales |
4,087 |
4,257 |
4,581 |
4,531 |
4,620 |
Volume growth |
-1.1% |
4.2% |
7.6% |
-1.1% |
2.0% |
Utilisation rate |
78% |
81% |
84% |
85% |
85% |
Balance sheet |
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Net operating assets |
15,131 |
12,680 |
9,128 |
10,100 |
10,576 |
Investments |
-1,104 |
-1,236 |
-1,273 |
-1,273 |
-1,273 |
Equity |
13,543 |
8,058 |
7,291 |
7,235 |
7,518 |
Minority interest |
0 |
0 |
0 |
0 |
0 |
Net debt (cash) |
484 |
3,386 |
564 |
1,592 |
1,786 |
Balance sheet ratios |
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Gearing* |
3.5% |
29.6% |
7.2% |
18.0% |
19.2% |
Net debt to EBITDA |
2.5x |
- |
0.2x |
1.2x |
1.1x |
RoCE |
-5.9% |
-7.6% |
19.2% |
5.1% |
7.5% |
RoIC (after tax) |
-18.9% |
-14.3% |
8.6% |
-3.5% |
4.8% |
RoE |
-19.2% |
-24.7% |
8.2% |
-0.8% |
3.8% |
*Gearing defined as net debt/(net debt +equity)
**Working capital days is defined as (working capital/revenue)*365
Renaissance Capital
6 February 2019
Metals & Mining
|
Target Price, ZAR: |
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4.00 |
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Last Price, ZAR: |
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3.45 |
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Potential 12-month return: |
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15.9% |
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Dec-YE |
2016 |
2017 |
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2018E |
2019E |
2020E |
Cash flow statement |
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Operating cash flow |
-1,052 |
-672 |
|
5,285 |
640 |
1,753 |
Growth capex |
-335 |
-322 |
|
-61 |
0 |
0 |
Maintenance capex |
-1,673 |
-1,002 |
|
-1,181 |
-1,204 |
-1,604 |
FCF |
-3,060 |
-1,996 |
|
4,044 |
-564 |
149 |
Equity shareholders' cash |
-1,863 |
-2,902 |
|
2,822 |
-1,028 |
-194 |
Dividends and share buy backs |
4,500 |
0 |
|
0 |
0 |
0 |
Movement in net debt |
2,637 |
-2,902 |
|
2,822 |
-1,028 |
-194 |
Cash flow ratios |
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|
Capex/EBITDA |
1057% |
-420% |
|
39% |
89% |
95% |
FCF yield |
-31.7% |
-17.2% |
|
97.2% |
-10.5% |
2.7% |
Cash conversion ratio |
-0.7x |
-1.1x |
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4.5x |
-18.4x |
-0.7x |
Equity shareholders' yield |
-47.2% |
-73.6% |
|
71.6% |
-26.1% |
-4.9% |
Working capital days** |
20 |
17 |
|
17 |
17 |
14 |
Valuation |
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Calculation of target price (TP) |
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ZARmn |
ZAR/share |
Steel |
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|
|
|
3,049 |
2.79 |
Coke and chemicals |
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|
|
|
3,449 |
3.15 |
Other |
|
|
|
|
2,565 |
2.35 |
Enterprise value |
|
|
|
|
9,063 |
8.29 |
Financial instruments as at 31 December 2017 |
|
|
|
-1,236 |
-1.16 |
|
Net debt as at 31 December 2017 |
|
|
|
|
-3,386 |
-3.10 |
Equity value |
|
|
|
|
4,441 |
4.03 |
Rounded to |
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|
|
|
|
4.00 |
Share price on 1/2/2019 |
|
|
|
|
|
3.45 |
Expected share price return |
|
|
|
|
|
15.9% |
Plus: expected dividend yield |
|
|
|
|
|
0.0% |
Total implied one-year return |
|
|
|
|
|
15.9% |
Share price range, ZAR: |
|
|
|
|
|
|
12-month high on 28-5-2018 |
6.08 |
12-month low on 7-8-2018 |
1.86 |
|||
Price move since high |
-43.3% |
Price move since low |
|
85.5% |
||
Calculation of discount rate |
|
|
|
|
|
|
WACC |
14.4% |
Cost of debt |
|
|
10.0% |
|
Risk-free rate |
9.0% |
Tax rate |
|
|
28% |
|
Equity risk premium |
6.5% |
After-tax cost of debt |
|
7.2% |
||
Beta |
1.30 |
Debt weighting |
|
30% |
||
Cost of equity |
17.5% |
Terminal growth rate |
|
2.0% |
||
Valuation ratios |
|
|
|
|
|
|
Dec-YE, $mn |
2016 |
2017 |
|
2018E |
2019E |
2020E |
P/E multiple |
-3.6x |
-3.7x |
|
5.7x |
-67.5x |
13.4x |
Dividend yield |
0.0% |
0.0% |
|
0.0% |
0.0% |
0.0% |
EV/EBITDA |
50.8x |
-36.9x |
|
1.3x |
4.0x |
3.3x |
P/B |
0.7x |
1.0x |
|
0.5x |
0.5x |
0.5x |
NAV per share, ZAR |
12.4 |
7.4 |
|
6.7 |
6.6 |
6.9 |
|
|
|
|
|
|
|
Source: Bloomberg, Thomson Reuters, Renaissance Capital estimates
71