Merrill Lynch today published a new review of Israel Chemicals Ltd. (TASE: CHIM) following the publication of the company’s financial report for the first quarter. The investment bank says, “Israel Chemicals this morning posted strong first quarter numbers, which exceeded our expectations top to bottom.”
Merrill Lynch gives Israel Chemicals a “Buy” recommendation with a target price of NIS 36, compared with its yesterday’s closing price of NIS 33.46.
Merrill Lynch says, “The main highlight of the results was the volume surge both in potash and phosphate to Asia due to the postponement of shipments in second half of 2006 into the first half of 2007. This is technical correction and we expect volumes to come back to normal levels in second half of 2007. As expected the bromine market is seeing a decline in volumes with no pricing power to compensate. The softening US economy and decline in electronic consumption growth will continue to cast a cloud over the fire retardants business.”
Looking ahead, Merrill Lynch says that price announcements across the globe for both potash and phosphate should add $160 million a year to Israel Chemicals’ revenue from potash and $70 million for phosphates. However, shipping rates will affect expenses, although selling price will more than offset this factor.
Clal Finance Batucha Ltd. also published a review of Israel Chemicals. The investment house is quite cool towards the report, which it calls “mixed”, especially with regard to the very low profit margin for fire retardants. The investment house also pointed to the higher than expected erosion in general profitability caused by the rise in shipping costs and the appreciation of the shekel, and added that these factors were liable to affect the company’s second quarter results as well.
Published by Globes [online], Israel business news - www.globes.co.il - on May 29, 2007
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