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PhosAgro Is A Top Fixed Cost Fertilizers Producer

Invest Heroes profile picture
Invest Heroes


  • PhosAgro is a Russian chemical company that produces and sells phosphate fertilizers, nitrogen fertilizers and phosphates.
  • Phosphate fertilizer prices are up 87% and nitrogen fertilizer prices are up 53% since the beginning of 2020.
  • We expect high prices for fertilizers due to the high availability of mineral fertilizers for farmers and high gas prices. PhosAgro costs 3.7 FTM EV/EBITDA and gives 14.9% dividend yield.
Трактор распыления пшеничного поля, вид с воздуха

Bim/E+ via Getty Images

Investment Thesis

Gas prices for PhosAgro (OTC:PHOJY) are indexed at the inflation rate. Therefore, PhosAgro does not suffer from high gas prices, unlike global fertilizer producers.

75% of the cost of nitrogen-based fertilizers (urea) and 20% of the cost of phosphate-based fertilizers (DAP/MAP) depends on gas

This article was written by

Invest Heroes profile picture
Invest Heroes LLC is a CIS-based research firm founded in 2018. Since then, we provide equity and fixed income research services which become more and more well-known locally among both professional investors and private clients. Here’s what we do: - Cover top 120+ Russian, US and Chinese stocks - Cover 200+ Russian bonds (corporate, SOE’s) Provide our research as a paid service to several institutional clients, a couple dozen of asset managers/PM’s and about 3000 private clients Our team consists of 2 strategists as well as a team of analysts (equity market team & 1 fixed income). 9 analysts are currently working in our team, which has achieved global professional recognition. In the first year, we got into the Refinitiv and Factset, in the second year our estimates began to participate in the Refinitiv consensus, in the third year we are the best analysts in the Refinitiv rating for a number of Russian companies and we are in a process of signing with S&P Market Intelligence. Our forecasts are often ahead of the market, because of detailed business model built for each company. Contact details Sergey Pirogov CEO +7 (919) 762 76 64 s.pirogov@invest-heroes.ru Aleksandr Sayganov Head of Research +7 (708) 1238294 a.sayganov@invest-heroes.ru

Analyst’s Disclosure: I/we have a beneficial long position in the shares of PHOJY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (19)

Moscow – PhosAgro (Moscow Exchange, LSE: PHOR), one of the world's leading vertically integrated phosphate-based fertilizer producers, further to its notice of 29 April 2022, hereby announces that, on 19 May 2022, it received a formal permission from the Government Commission on Control for Effectuation of Foreign Investments dated 18 May 2022 authorising PhosAgro to maintain its depositary receipts programme effective and the depositary receipts issued thereunder (ISINs: US71922G3083; US71922G4073; US71922G1004) (the "DRs") to remain in circulation (the "Permission"). The Permission is not expressed to be limited in time.

The issue of the Permission means that the provisions of Federal Law No. 114-FZ "On Amendments to Federal Law "On Joint-Stock Companies" and Certain Legislative Acts of the Russian Federation" dated 16 April 2022 requiring Russian issuers to terminate their depositary receipts programmes, which came into force on 27 April 2022, do not apply to PhosAgro.
is it possible to but it anywhere now ?
jillydavid profile picture
Based on both of your models for share price development, the shares lose value toward 2023. 5140 and 4933 rubels respectively in the 2 models (EV/EBITDA and dividend yield). The dividend is also shrinking based on those same two tables. Unless I am reading this horribly wrong, why is this a good invesment?
Idkmuch profile picture
@jillydavid too cheap not to work unless the world ends
in short .. their expenses are linked to inflation .. while those of their competitors to nat gas .. if they are not stupid, they will sell their products at market prices .. at much much higher prices as nat gas has increased tremendously .. ok .. I keep it (bought at 14) .. bye
bazooooka profile picture
haoleboy1967 profile picture
@bazooooka hello fine gentleman
Dear Author, despite the significant reduction in earnings that you are forecasting for Phosagro in 2022, versus H2 2021, you do not suggest selling Phosagro in Q1 2022 for example, in the hope of buying back at a cheaper price further down the line.
If this is correct, then why not? Do you believe that the stock is sufficiently undervalued today anyway? Or maybe that it would be dumb to sell this company and run the risk of not receiving the Dividend?

I would be very interested to know your opinion regarding selling Phosagro before the lower earnings come out, or why you think it is worth holding on to this company even through a down year (2022)?

Thank you very much + very interesting article!
kiki089 profile picture
@Apple Juice Today I believe it is devalued enough... bought at $7
Idkmuch profile picture
@kiki089 how do you receive a dividend if they are cut off swift ?
kiki089 profile picture
@Idkmuch Good question, my biggest concern is being stopped out as a foreign investor (GDR delisting). I dont mind not cashing the dividends as long as I am paid in shares (this solution does not involve currencies). As a second choice I would go with a massive share buy back pending the end of the war.
Dear author, very well! Could you also comment on their investment plans and how these will impact future earnings. Thumbs up.
Invest Heroes profile picture
@BeaTriCe2014atSA We see that on russian stocks market usually makes sense the next 12M perspective. They also have investment program in process, it adds some additional capacities every year
@Invest Heroes many thanks
It trades at 5000 RUB in Moscow, but 22$ on LSE. Can you help me on this?
If read correctly, there is a 15% witholding tax on dividends?
Otherwise, great overview of the company, I think you're very conservative in the 2022 projections.
@mil6 : what trades in London is Global Depositary Receipts. One GDR only represents 1/3 of a share. That is why the difference.
Invest Heroes profile picture
@mil6 Thanks for your feedback!
We think LSE's stocks has low liquidity, so it is better to trade on MOEX.
We can't help with taxes, sorry.
We are conservative in our estimates for 2022, because even if PhosAgro will have one-off outstanding profits, the stocks usually don't price it.
@Invest Heroes Ugh, average volume in London is 50-100K/day, almost the same as in Moscow. And it seems to me that currently the London listed GDR is trading at a discount of ~10%, possibly due to the Cold War risks.
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