Noticed there was no CII thread so thought I would quickly start one to get some discussion going.
Overview: there is increasing talk of an agricultural 'super cycle' starting being driven by population growth, a change to Western diets, bio fuels demand etc. As we all know, modern agricultural technology needs fertiliser to drive optimum crop yields. Blah, blah.
CII - CI Resources is an ASX listed company with investments in phosphate and fertilizer. Specifically, CII holds the following interests -
- 38% stake in Phosphate Resources, a phosphate producer that carries out a 700k tpa phosphate operation on Christmas Island. As per 1/5 ann, PR has taken a stake in 3 Chinese phosphate mines in Guizhoi Provence (expected to increase to 300k tpa within 18 mths).
- 51% stake in XiFeng, a Singapore company holding a 32% stake in a fertilizer plant in Guizhou Provence, China.
Financials - CII:
- Profit year-ended Dec 2007 $1.38m.
- Net cash $5m
- Net assets $13.7m being cash plus $8.9m stake in Phopshate Resources and XiFeng.
I think the current shares in issue is 62.880m which gives a current NTA per share (based on Dec'07 accounts) of 8.6 cps. Thus the current share price of $0.55 cps is trading at quite a premium to NTA. Current profit of $1.38m vs market cap of $34.58m gives a cap rate of 4% too. Note that these numbers do not include the recent acquisitions.
So as you can see, it is a bit harder to come up with a val for this at the moment until the economics of the recent acquisition is explained.
What we know is -
1. It is cashflow positive;
2. It has increased its phosphate production to 38% of 1m tpa capacity;
3. It has cash to fund further purchases etc.
Anyway it is an interesting prospect given the action in agri plays in the market. Whether $0.55 represents fair value - not sure? Rushing to complete this so will have another look on the weekend.