市场见解

Is the Incitec Pivot (ASX:IPL) share price the next shortage winner?

How does Incitec Pivot fit into the AdBlue shortage equation?
The post Is the Incitec Pivot (ASX:IPL) share price the next shortage winner? appeared first on The Motley Fool Australia. –

The AdBlue shortage has been evolving over recent weeks as supplies of the diesel fuel additive dwindle. However, a deal struck today by the federal government has brought Incitec Pivot Ltd (ASX: IPL) and its share price into the picture.

In afternoon trade, shares in the industrial chemicals and fertiliser manufacturer are uneventfully trading flat at $3.21. Though shareholders probably aren’t complaining about the 40% return (before dividends) they have made so far this year.

Now, investors might be wondering whether the company could capitalise on the current AdBlue shortage.

AdBlue brings Incitec Pivot share price into focus

The Australian government has made a move to shore up supply for the additive, critical for keeping nitrogen oxides emissions in check in diesel-fuelled trucks as Australia hits mere weeks’ worth of AdBlue. Importantly, the deal is predicated on avoiding a situation that would threaten the transport of goods across the country.

Federal energy minister Angus Taylor revealed today that the government has reached an agreement with ASX-listed Incitec Pivot.

As a result, the manufacturer will dramatically boost its production of urea. This chemical compound is critical to the production of AdBlue.

Prior to this announcement, Incitec Pivot released a public statement on 12 December regarding AdBlue supply. In this statement, Incitec stated that it supplies around 10% of the Australian market for the additive and is the only local producer to make the solution from urea melt. Meanwhile, the remaining 90% is reliant on imports.

In the minister’s statement, Taylor reaffirmed the deal won’t have an impact on fertiliser supply, saying:

The ramping up of production by Incitec Pivot will be done without impacting agricultural fertiliser supply to local farmers or disrupting local distribution chains for AdBlue.

However, the specific financial terms of the critical deal have not been shared. Ironically, a month ago, the company announced plans to close down its Gibson Island manufacturing plant at the end of 2022.

How has the core business performed?

In the last financial year, Incitec Pivot’s core businesses have been performing solidly. In FY21, revenue rose 10% to $4,348.5 million. At the same time, company earnings soared 91% to $209 million as the fertiliser market benefitted from a strengthening in commodity prices.

Based on the current Incitec Pivot share price, the company currently trades at ~29.7 times price-to-earnings (P/E). This is roughly in line with the company’s P/E multiple prior to the COVID-19 pandemic. Comparatively, the Australian chemicals industry’s average P/E ratio is around 37 times.

Finally, Incitec Pivot appears to be financially stable based on its balance sheet. An uptick in free cash flow put its cash position at $651.8 million at the end of September 2021.

The post Is the Incitec Pivot (ASX:IPL) share price the next shortage winner? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Incitec Pivot right now?

Before you consider Incitec Pivot, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Incitec Pivot wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

5 things to watch on the ASX 200 on Friday

4 ASX shares tipped for buybacks in 2022: expert

Here’s why this fund manager sold its Star Entertainment (ASX:SGR) shares

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

随时随地,交易世界!

移动APP平台,拥有 12 个市场的 50,000 多种全球上市证券(全球市值超过 70%),直接在您的 Android 或 iOS 设备上即可操作。

与独有的交易理念和投资分析工具相结合,帮助您在我们 12 个全球市场中的几乎所有金融工具上找到可操作的见解,从而帮助您优化交易策略。

推荐给您的朋友

向您的朋友推荐Monex并赠予他们免费使用我们交易工具的机会

我们尊重您的隐私,只会向您的朋友发送一封邮件 

与您的朋友分享

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!