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Intrepid Potash, Inc. Message Board

  • investora2z investora2z Apr 11, 2013 12:48 PM Flag

    Future depends on realizations

    The downtrend is continuing and the 52 week low of $17.93 was touched a few days back. The stock is now trading significantly below the 200 DMA (~$21) and 50 DMA of around $19. The volumes have been high indicating momentum on the downside is reasonably strong. Some bounce can be expected but volumes have to support if the trend has to be sustainable. The trailing P/E still remains around 16, and the forward P/E is around 14 indicating moderate expectations of growth. The price to book is, however, reasonable at 1.56 but the price to sales is a little high at 3.47. All the potash companies have been on the decline basically due to declining margins as a consequence of lower realizations. For IPI, though the revenues grew by ~2% in 2012, the net profit declined by 20%. The gross margins for potash declined from $235 per ton in 2011 to $199 per ton in 2012. Even on a quarterly basis, the net profit declined by 42%. The coming few quarters and years are expected to be better for potash prices. Though there is likely to be capacity addition, the demand is also likely to rise over time. China and India are likely to be major contributors for demand. Importantly, the current times of depressed prices are good for strategic acquisitions. IPI has 58 million cash and there is zero debt on books. Development stage companies, like Passport Potash (PPRTF) which owns properties with high potential in the Holbrook basin, are currently available at low valuations. Consolidation, and strategic acquisitions, if done at reasonable valuations are good for the long term prospects of the company. Even companies like PPRTF are on the look out for partners for faster development of their mines. Intrepid can look for other options in the market, and also remain focused on improving cost efficiencies. This way it can prepare for the good times ahead, and become better positioned than the competitors.

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    • "The coming few quarters and years are expected to be better for potash prices. Though there is likely to be capacity addition, the demand is also likely to rise over time. China and India are likely to be major contributors for demand"
      Good post with some valid posts, but it appears supply is increasing faster than demand. There is zero evidence potash prices are increasing. The stock is stuck here pending potash prices.

 
IPI
7.53-0.38(-4.80%)Sep 1 4:04 PMEDT