Sunday PonderingsThe article below makes some things very clear to the reader..
TSX Price to Earnings ratio is 14.6 times forward earnings
Allana will have $2.81 projected Earnings Per Share x 14.6 times forward earnings =
$41.00 per share AAA
thats 2,700% from current trading level...can anyone put me onto a GIC, Bond or Interest Bearing Account or Mutual Fund that can generate anything like that within 3 years and the company meeting its milestones?
Earlier poster commented on Potash Corp. looking to expand out of Canada...the author of this article thinks it
is likely Agrium that will be the one.... "
Agrium could snap up small competitors to expand into new markets, consolidate its global market share, and/or increase its negotiation leverage with suppliers."
Either way....majors are likely to have a good look at our basin...remember there are only the Four Horseman in the world...thats all folks..and with Brazil looking to produce millions of tonnes of potash from the Amazon...it makes sense for those in Canadian Cartel to look abroad and diversify...if they dont...someone else will...and you dont have to a Major be in the fertilzer business to see the long term value..
The author nailed it all with his comment:...".
The “out of sight, out of mind” mentality is playing tricks with some investors again"... you can not have the projected growth in GDP of emerging markets and not expect that they are going to demand more protein and well...just plainly said...more FOOD.....If I am wrong...please explain?
CHEKKMATE recently posted his calculation using Dundee's Report:
Calculations:
1. Partner’s Share of 2mt= 20%= 400,000 t Allana’s Share= 1,600,000 t
2. Partner’s Share of Capex= $315m Allana’s Share= $585m
3a. Partner’s Cost of KCL= $400(=discount 20%) X 400,000= $160,000,000
3b. Partner’s Share of contingent costs= $44,000,000
}5% NSR of ($500/t X 400,000)= $2 million
}Opex operating costs ( $105 X 400,000)= $42 million
3c. Partners Total Cost [ cost of kcl + contingent costs ]= $206,000,000
Note: Partner’s 35% of Capex repaid in less than 2 years
4. Allana’s Share of 2mt= 1,600,000 t
5. Allana’s NPV:
-1.6mt X $500= $800,000,000
-$800m minus 40m(5% nsr)= $760m
-$760m minus $168m (opex= $105 X 1,6mt)= $592m
-$592m minus $29.25m ( 1st yr int. @5% on $585m}Allana’s share of capex)
= $562.75m = NPV
Note: Amortization of loan-debt over 15 years would result in a greater NPV.
6. Net Revenue= $562.75m / 200m (outstanding shares)= EPS of $2.81
Note: EPS would become greater as the variable of price increases and/or debt servicing
decreases and Partner’s 20% charged @ going market value.
3 Reasons Why Agrium Will Rise with Explosive Global Food Demand
by: Follow My Alpha July 10, 2011
A Quick Play By the Numbers:
From a price multiple perspective, we think AGU is undervalued. For example:
The industry average price/sales ratio is 2.9, but AGU trades at 1.2.
Given AGU’s strong recovery, we’re surprised it’s not higher, but we aren’t going to complain about the opportunistic valuation. And since AGU’s forward price/earnings ratio is only 10.7 compared to
The Forward Price/Earnings Ratio for the S&P/TSX Composite’s at 14.6, We see this as a nice discount. Based on these two metrics, it looks like AGU trades at a reasonable price.
Arable land per person on a global basis is declining. Why? One reason that doesn’t immediately come to mind is the increased demand for meat from emerging markets like China and the proportionate increase it creates for cattle grain. Everyone understands that an increasing global population will increase demand direct grain consumption by people. But many forget that the demand for meat also increases the demand for grain. The only solution is to increase yields through chemicals and fertilizers
When the global economy crashed, so did potash prices. While this left some investors with a bad taste, it’s time to gargle and look at the fertilizer sector again. After all, “bad things” must happen in the short term if any investor wants to buy low and sell high.
Hungry for More Power:
In our view, the industry has bottomed out, but retail agriculture remains fragmented. Agrium could snap up small competitors to expand into new markets, consolidate its global market share, and/or increase its negotiation leverage with suppliers. Without question increasing global demand for food has increased revenue growth but we like to see more than one avenue of growth such as this.
Many top investors seem to have the memory of goldfish and think that the “food play” is over. Really? Not so fast, investment rocket scientists of the world..... With global food supplies struggling to keep up with increasing demands, the notion that the GDP of emerging markets will grow rapidly -- but their demand for food won’t is comical at best. The “out of sight, out of mind” mentality is playing tricks with some investors again