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Goldman Sachs' Takeaways From Mosaic CFO Meeting

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Goldman Sachs met with the CFO and VP of Mosaic Co (NYSE: MOS) at a sell-side lunch in New York City.

In a midday note, Goldman's Adam Samuelson said the event contained little in the way of "new news" aside from management conveying a view of cautious optimism regarding global demand for P&K in the second half of 2016.

Samuelson says Mosaic management was indifferent "to the China contract and would not dismiss the possibility of a move to spot" regarding demand for Potash from India, Brazil and North America once Chinese ambiguity is resolved.

  • As for Phosphates: "encouraged on declining exports from China YTD, which coupled with stronger Indian demand and lower raw materials would improve 2H margins, consistent with its prior views."
  • And on North American demand: "domestic demand was healthy this year and management expects more normal channel refill post-spring. MOS noted that it has yet to see any signs of K+S Legacy tonnes (via Koch) being pre-marketed in NA."
  • As for Esterhazy: "MOS has $150mn left to spend on the initial K3 shaft, which should be completed in 6-9 months. Phase 2, which is intended to supplant K1 and K2 and ultimately eliminate brine inflow costs, is an additional $1.5bn for another shaft and will come at the expense of less sustaining capex for K1 and K2."
  • And finally, Canpotex: "proving runs is a legacy of the 70s/80s and that there could be a more efficient means to prove capacity. It expects its Canpotex entitlement to be ~38% at the end of all current expansions."

Updates from the company regarding the multi-year capital program are expected during October's analyst day.

Shares of Mosaic traded up more than $70 or roughly 2.5 percent at $29.06. Mosaic remains Neutral rated with a $24 price target.

Latest Ratings for MOS

May 2018RBC CapitalUpgradesSector PerformOutperform
May 2018BMO CapitalMaintainsMarket PerformMarket Perform
May 2018Credit SuisseMaintainsUnderperformUnderperform

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Posted-In: Adam Samuelson Goldman SachsAnalyst Color Price Target Reiteration Analyst Ratings


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