Incitec Pivot Placement - Not Really a Distress Raising

Leading Independent Investment Research, Morningstar, Inc.

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Equity Bottom-Up

<ul><li class="p1">Incitec Pivot is a leading global explosives company and&nbsp;Australian fertiliser manufacturer and distributor.</li><li class="p1">Fertiliser&nbsp;is a cyclical business and, despite a strong domestic market&nbsp;position, prices are subject to global supply and demand,&nbsp;so earnings are volatile.</li><li class="p1">Explosives provide greater earnings&nbsp;stability, with demand from the global mining sector.</li><li class="p1">The Australian explosives&nbsp;(ammonium nitrate) industry and the global explosive&nbsp;markets face considerable headwinds.</li><li class="p1">Oversupply, driven&nbsp;by capacity additions, at a time when the outlook for growth&nbsp;in demand for Australian coal and iron ore is muted, is&nbsp;central to the more subdued outlook.</li><li class="p1">We downgrade our fair value estimate to A$ 2.50 per share&nbsp;from A$ 3.30 per share after reassessing Incitec's&nbsp;medium-term growth potential.</li></ul><p class="p1"><em>Analysts: Mark Taylor &amp; Mathew Hodge</em></p>

Incitec Pivot is a leading global explosives company and&nbsp;Australian fertiliser manufacturer and distributor.Fertiliser&nbsp;is a cyclical business and, despite a strong domestic market&nbsp;position, prices are subject to global supply and demand,&nbsp;so earnings are volatile.Explosives provide greater earnings&nbsp;stability, with demand from the global mining sector.The Australian explosives&nbsp;(ammonium nitrate) industry and the global explosive&nbsp;markets face considerable headwinds.Oversupply, driven&nbsp;by capacity additions, at a time when the outlook for growth&nbsp;in demand for Australian coal and iron ore is muted, is&nbsp;central to the more subdued outlook.We downgrade our fair value estimate to A$ 2.50 per share&nbsp;from A$ 3.30 per share after reassessing Incitec's&nbsp;medium-term growth potential.Analysts: Mark Taylor &amp; Mathew Hodge

Tough Medium-Term Outlook. Our Fair Value Estimate is A$2.50