Morningstar backs Incitec Pivot strategy change on fertiliser arm
Make us a preferred source
Make us a preferred source on Google
The news: Morningstar analysts expect little change to Incitec Pivot’s earnings after the company’s decision to end talks for the sale of its fertilisers business.
The numbers: Morningstar kept its fair value estimate on Incitec shares unchanged at $3.40 a share, with fiscal 20204 and 20205 earnings per share estimates barely changed at 18 cents and 23 cents respectively.
Incitec shares were up 2.3% to $3.11 in early trading on the ASX after the company released an investor presentation that reiterated the positive outlook for its Dyno Nobel business.
The context: The Melbourne-based fertilisers and explosives group announced in July it was ending negotiations with Indonesia's state-owned industrial group PT Pupuk Kalimantan Timur (PKT) over the potential sale of its fertilisers business.
What they said: “Despite an intention to continue to assess options for structural separation, the closure of negotiations at least allowed an $900 million on-market share buyback to proceed," Morningstar analyst Mark Taylor said in a note.
"We applaud the decision not to rush a fertilizer sale. The segment comprises about one third or $1.20 per share of our fair value estimate."
The sources: Morningstar , ASX announcement
