New share price estimates Here a new analysis. The only thing missing is the cut that ICL will get by selling the product.
Using the parameters of the FS...
| Year | 2017 | 2018 | 2019 |
| Produced Amount MOP | 400,000 | 750,000 | 1,000,000 |
| Price MOP | 325 | 350 | 375 |
| Operating Revenue | 130,000,000 | 262,500,000 | 375,000,000 |
| | | | |
| Operating Expenditures | 60,212,282 | 92,521,440 | 112,440,762 |
| Government Royalties (4%) | 5,200,000 | 10,500,000 | 15,000,000 |
| Licensor Royalties (NSR) (1.5%) | 1,950,000 | 3,937,500 | 5,625,000 |
| Operating Profit | 62,637,718 | 155,541,060 | 241,934,238 |
| | | | |
| Depreciation | 46,978,589 | 53,855,630 | 54,283,644 |
| Profit before Tax | 15,659,129 | 101,685,430 | 187,650,594 |
| Income Tax (Tax holiday) | 0 | 0 | 0 |
| Profit After Tax | 15,659,129 | 101,685,430 | 187,650,594 |
| Government Free-Carried Interest (5%) | 782,956 | 5,084,272 | 9,382,530 |
| | | | |
| Profit After Tax | 15,659,129 | 101,685,430 | 187,650,594 |
| Government Free-Carried Interest (5%) | 782,956 | 5,084,272 | 9,382,530 |
| Profit After Tax (net income) minus Government Free-Carried Interest (dividend) | 14,876,173 | 96,601,159 | 178,268,064 |
Here how I calculated the share price (all the parameters come from the FS and it is based on 1 MTPY and no railway):
First, some theory about earnings per share (EPS):
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Definition of 'Earnings Per Share - EPS'
The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.
Calculated as:
EPS = (net income – preferred dividends) / weighted average number of common shares
When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.
Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number.
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From the equation above:
1- Net income is also known as “Profit After Tax”. Profit After Tax is the concept used in the FS.
2- Although we do not have a dividend, the FS conceptualized the “Government Free-Carried Interest” (aka the 5% royalty) as a dividends (p.190 of the FS))
3- Average outstanding shares. (I use 4 different scenarios, ranging from 400m shares to 700 m shares). I add 2 million shares every year for compensation (new options).
| Number of shares (Different scenarios) | 2017 | 2018 | 2019 |
| # shares (scenario #1) | 400,000,000 | 402,000,000 | 404,000,000 |
| # shares (scenario #2) | 500,000,000 | 502,000,000 | 504,000,000 |
| # shares (scenario #3) | 600,000,000 | 602,000,000 | 604,000,000 |
| # shares (scenario #4) | 700,000,000 | 702,000,000 | 704,000,000 |
Earnings per shares according to the different scenarios =
Profit After Tax (net income) minus Government Free-Carried Interest (dividend) / number of shares
| Earnings per shares | 2017 | 2018 | 2019 |
| Earning per share (scenario #1) | 0.037 | 0.240 | 0.441 |
| Earning per share (scenario #2) | 0.030 | 0.192 | 0.354 |
| Earning per share (scenario #3) | 0.025 | 0.160 | 0.295 |
| Earning per share (scenario #4) | 0.021 | 0.138 | 0.253 |
Now, if we apply the average P/E ratio in the industry (15.76) (P/E ratio from April 9, 2014)
| POT | Potash Corp./Sask... | 16.70 |
| AGU | Agrium Inc. | 12.93 |
| MOS | Mosaic | 17.67 |
We get the following share prices (estimates may vary due to rounding):
Share prices according to the different scenarios =
Earnings per shares * P/E ratio
| Share price | 2017 | 2018 | 2019 |
| Share price (scenario #1 = 400 m shares) | $0.59 | $3.79 | $6.96 |
| Share price (scenario #1 = 500 m shares) | $0.47 | $3.03 | $5.58 |
| Share price (scenario #1 = 600 m shares) | $0.39 | $2.53 | $4.65 |
| Share price (scenario #1 = 700 m shares) | $0.34 | $2.17 | $3.99 |
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