Orica Limited (ORI)

ORI continues expanding into mining services around its leading global market share in explosives. It still has minor chemicals after selling its fertiliser business. It plans demerging its consumer product businesses. Key medium-term driver is the length of the resource boom. ORI is generally well managed with sound financial disciplines. Competitive advantages include its duopoly Australian explosives business, global explosives distribution and proven capital investment discipline. Messy hybrids subdue ordinary dividends. It is more suitable for growth portfolios with private equity appeal. The yield is lightly franked with a large rights issue completed.

ORI completed its rights issue, raising $899m.
Business Impact: Retail shareholders who did not subscribe at $22.50 - around 50% - will receive 10c for their lapsed entitlements after the bookbuild at $22.60 – please refer our last update. Will ORI trade back up to the theoretical ex-rights price of $26.90 before the de-merger?

P/E 11
Dividend Yield 5% (32% franked)

UBS & Deutsche Bank rate ORI as Buy

Credit Suisse & Macquarie Bank rate ORI as Outperform

Bought some shares of ORI today