1. Real Client Portfolio Management
Antti Zhang
Patrina Kittipoomvong
Shih-Wei Huang
Angela Jiang
Ying-Min Weng
March 8, 2011

2. Agenda Company overview Industrial Introduction
Porter’s five forces analysis
Comparables analysis
SWOT analysis
Financial statement analysis
Valuation
Recommendation

3. Portfolio holdings Dec 18, 2009 purchased 200 shares at $55.00
As of March 7th ,2011 trading at $ 82.72
50.40% unrealized gain of $5,544.00
Total value $16, Represent 14.35% of total portfolio value

4. Company Overview
Incorporated in January 2004 through business combination of IMC Global Inc. and the fertilizer business of Cargill.
Headquarter in Plymouth, MN
Market capitalization 37.5 B
Leading producers and marketers of concentrated phosphate and potash.

5. Company Overview
Cargill announcement in January 2011 to dispose its stake in MOS
Exchange offer for Cargill shareholders to exchange Cargill share for Mosaic share
Currently holds 64%
The transaction is expected to close in the second calendar quarter of 2011.

6. Historical Price movement
Source :

7. Company Overview Vertically integrated operation Production
Mining of mineral resources
Production
Crop nutrient
Feed
Industrial
Distribution to customers

8. Business Segments Crop Nutrition MicroEssentials Industrial Feeds
Phosphate
Crop Nutrition
MicroEssentials
Feeds
Potash
Industrial
Other
Source: Mosaic K

9. Business Segments :Phosphate
Leader phosphate producer
Annual capacity 9.7 million tonnes
Production represented
13% of global production
56% of North American production
Sales $4.7 Billion
Gross margin 13.7%
Source: Mosaic K

10. Business Segment :Phosphate
Production facilities
Central Florida and Louisiana
2 phosphate rock mines added
81% operating rate in 2010
In 2010, acquired a 35% stake in a joint venture that owns phosphate rock mine in Peru

11. Business Segments :Potash
Third largest Potash producer in the world
Annual capacity of 10.4 million
Production represented
12 % of global production
38 % of North American production
Net sales $2.2 Billion
Gross margin 47.6%

12. Business segment: Potash
Production facilities
3 mines in Saskatchewan, Canada
2 mines in United states
Long-term capacity expansion plan in Saskatchewan
Increase capacity by more than 5 million tonnes

13. Geographic distribution- Net sales
Millions
Source: Mosaic K

14. Geographic distribution- Net sales
Phosphate
28%
29%
Potash
40%
60%
Source: Mosaic K

15. Management Discussion and Analysis
Lower cost structure
Improve through expansion in sales and production volume
Future Sales mix
60% Potash and 40% Phosphate
High capital expenditure expectation from Phosphate expansion project

16. Industry Introduction
Commoditized Product
Slightly product differential
Volatility
Inelastic Demand
First Stage of Industry
Reserve Supply
Economic of Scale

17. Revenue Forecast Volume Driver Price Driver Population Growth
Food Quality Increase
Export and Import
Soil Productivity
Price Driver
Normal Inflation
Bargaining Power
Product Yield
Oversupply or Shortage

18. US Fertilizer Revenue
Source: Datamonitor

19. Product’s Breakdown Mosaic’s Global Operation North America
Rest of the World
Potash
K2O
38%↑
12% ↑
Phosphate
P2O5
56%↓
13%
Source: Mosaic’s Annual Report

20. Mosaic’s Forecast

21. Porter’s 5 Forces: Supplier Power
Medium
Suppliers provide raw materials under long- term contracts
Market players dependent on providers of energy
Suppliers are not overly dependent on customers
Rivalry
Threat of
Entry
Buyers
Suppliers
Threat of Substitutes

22. Porter’s 5 Forces: Buyer Power
Medium
Large number of buyers ranging from different sizes
Products are fairly commoditized
Products are vital for buyers and have direct influence over future income
Rivalry
Threat of
Entry
Buyers
Suppliers
Threat of Substitutes

23. Porter’s 5 Forces: New Entrants
Weak
Manufacturing requires scale
Capital costs are high
Lead times are long
Dominated by large players that own significant assets
Economically mineable deposits are rare for potash
Rivalry
Threat of
Entry
Buyers
Suppliers
Threat of Substitutes

24. Porter’s 5 Forces: Substitutes
Weak
Organic fertilizers and GM products exist as substitutes
No substitute for potash
Organic fertilizers generally used in combination with inorganic fertilizers
Rivalry
Threat of
Entry
Buyers
Suppliers
Threat of Substitutes
Inorganic fertilizers are more spread out and less expensive

25. Porter’s 5 Forces: Rivalry
High
Concentrated market dominated by large players
High price competition
High fixed costs increase exit barriers
Rivalry
Threat of
Entry
Buyers
Suppliers
Threat of Substitutes

26. Competitors Potash (POT) Agrium (AGU) CF Industries (CF)
Largest manufacturer of potash; 3rd largest manufacturer of phosphate and nitrogen
Market cap: $52bn / 2010 Sales: $6.5bn
Agrium (AGU)
Focus on nitrogen and potash
Market cap: $15bn / 2010 Sales: $10.5bn
CF Industries (CF)
Focus on nitrogen and phosphate
Market cap: $10bn / 2010 Sales: $4.0bn

27. Potash (POT) Largest capacity
Largest producer of potash
3rd largest producer of nitrogen and phosphate
Revenue diversified across North America, Asia, and South America
Revenue evenly spread across all 3 products

28. Agrium (AGU) Operates in 3 business segments:
Retail ($7bn sales)
Wholesale ($3.7bn sales)
Advanced Technologies ($1bn sales)
Acquired AWB in December 2010 to increase distribution capabilities for its Retail business in New Zealand and Australia
Production focus is on nitrogen and potash

29. CF Industries (CF)
Merged with Terra Industries to gain nitrogen production capabilities in April 2010
Second largest nitrogen producer in the world
Third largest producer of phosphate

30. SWOT Analysis Strengths Weaknesses Strong market position
Balanced crop nutrition portfolio
Globally diversified revenue
Limited number of production and distribution facilities
Debt covenants
Opportunities
Threats
Growth in global fertilizer market
JVs to gain phosphate mines outside of North America
Increase in long term contracts
Intense price competition
Regulatory restrictions on emissions
Volatile weather conditions
Prices stabilized mid-2010 and are expected to increase in 2011

31. Operating Statistics
Mosaic’s margins and growth prospects are in line with its competitors while its capital position is less levered
Source: Capital IQ

32. MOS vs Competitors

33. Current Financial Analysis
In Millions
FY06
FY07
FY08
FY09
FY10
Net Sales
5,305.8
5,773.7
9,812.6
10,298.0
6,759.1
%Growth
20.68%
8.82%
69.95%
4.95%
-34.36%
Gross Profit
637.4
926.1
3160.5
3149.9
1693.3
%Margin
12.01%
16.04%
32.21%
30.59%
25.05%
EBIT
389.5
616.3
2825
2784.7
1270.8
% Margin
7.34%
10.67%
28.79%
27.04%
18.80%
Capex
-404.4
-292.1
-372.1
-781.1
-910.6
Net Income
-121.4
419.7
2082.8
2350.2
827.1
-2.29%
7.27%
21.23%
22.82%
12.24%
Source: Capital IQ

34. IS Trend Analysis FY06 FY07 FY08 FY09 FY10 Revenue 100 109 185 194 127
FY06
FY07
FY08
FY09
FY10
Revenue
100
109
185
194
127
Cost Of Goods Sold
104
142
153
Selling General & Admin Exp.
128
134
133
149
EBIT
158
725
715
326
Net Interest Expense 98 59 28 32
EBT
490
2,512
2,691
1,055
Tax
2,328
13,489
12,251
6,553
Net Income
346
1,716
1,936
681

35. BS Trend Analysis FY06 FY07 FY08 FY09 FY10 Cash And Equivalents 100.0
FY06
FY07
FY08
FY09
FY10
Cash And Equivalents
100.0
242.7
1,131.4
1,559.8
1,455.9
Accounts Receivable
111.6
203.5
119.6
117.7
Inventory
103.5
177.5
148.0
131.7
Total Current Assets
123.5
303.9
335.3
314.3
Net Property, Plant & Equipment
100.7
105.2
110.9
123.8
Total Assets
105.1
135.5
145.3
145.7
Accounts Payable
111.4
262.6
98.6
145.6
Short-term Borrowings
90.7
87.1
60.7
54.4
Total Current Liabilities
144.4
193.7
143.7
115.5
Long-Term Debt
76.1
57.6
52.6
52.2
Total Liabilities
95.9
97.9
80.5
76.6
Total Equity
118.4
190.2
239.8
246.4
Total Liabilities And Equity

36. Performance by Segments-Sales
Phosphates
FY06
FY07
FY08
FY09
FY10
Total sales
3,098
3,204
7,477
7,410
4,731
Sales change(%) 3%
133%
-1%
-36%
Gross margin(%)
8.0%
13.5%
30.8%
16.6%
13.7%
Potash
1,156
1,479
2,251
2,817
2,174
28%
52%
25%
-23%
30%
38%
53%
48%
Source: Company’s 10-K

37. Performance by Segments-CAPEX
Phosphates
FY06
FY07
FY08
FY09
FY10
Operating earnings
-142.8
311.2
2023.2
961.7
349.5
Capex
263.8
136.2
219.4
430.3
265.1
Depreciation
201.7
185.4
220.1
231
293.8
Potash
309.8
368.2
798.6
1409.9
922.8
104
135.1
149.5
343.6
619.7
105.8
119.1
128.5
119.4
140.1
Source: Company’s 10-K

38. Ratio Analysis Source: Capital IQ Activity ratio FY06 FY07 FY08 FY09
Industry
Days of Inventory on hand 59 58 63 77
Days of sales outstanding 31 30 27 26 29
Number of day of payables 40 36 34
Cash conversion cycle 60 45 53 72
Fixed asset turnover
1.2
1.3
2.2
1.9
Total asset turnover
0.6
0.9
0.8
0.5
Profitability Ratios
Gross profit margin
12%
16%
32%
31%
25%
35%
Operating profit margin 7%
11%
29%
27%
19%
Net profit margin
-2%
21%
23% 9%
ROA
-1% 5%
20% 8%
ROE
-3%
38%
10%
18%
Source: Capital IQ

39. Ratio Analysis (continued)
Liquidity Ratios
FY06
FY07
FY08
FY09
FY10
Industry
Current ratio
140%
120%
220%
327%
382%
160%
Quick ratio
60%
138%
224%
248%
Cash ratio
15%
26%
90%
167%
193%
Solvency Ratios
Debt-to-assets ratio
30%
13%
11%
Debt-to-capital ratio
43%
36%
19%
14%
24%
Debt-to-equity ratio
74%
56%
23%
16%
32%
Financial leverage ratio
2.5
2.3
1.9
1.6
1.5
Interest coverage 2 4 23 31 19 14
Source: Capital IQ

40. DuPont Analysis FY06 FY07 FY08 FY09 FY10 Tax Burden -69% 84% 74% 87%
FY06
FY07
FY08
FY09
FY10
Tax Burden
-69%
84%
74%
87%
70%
Interest Burden
45%
81%
100%
97%
93%
Operating Profit Margin 7%
11%
29%
27%
19%
Asset Turnover
0.61
0.63
0.83
0.81
0.53
Leverage
2.46
2.18
1.75
1.49
1.45
ROE
-3.42%
9.98%
30.84%
27.60%
9.45%

41. Forecasting Assumptions
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2017
Revenue Growth (%)
13.88%
11.88%
6.60%
8.35%
8.47%
8.59%
5.22%
Phosphates % of Revenue
18.09%
15.89%
9.53%
11.65%
11.68%
11.71%
5.40%
Potash % of Revenue
10.30%
8.24%
3.78%
4.99%
5.00%
4.95%
Gross Margin(%)
28.2%
28.7%
29%
29.5%
29.9%
30.3%
30.4%
NI Margin(%)
14.87%
15.58%
15.98%
16.47%
16.95%
17.43%
17.52%
Dividends
$0.05 / Quarter
Capex
1,112
1,083
673
908
998
1,098
725
Depreciation Expenses
391.01
445.29
498.19
531.07
575.41
624.15
677.76

42. Discount Factor β 1.35 Rf 3.47% Rd 7.54%
Equity Risk Premium( )
-3.40%
Historical Equity Risk Premium( )
6.5%
Equity Risk Premium
5.51%
ROE based on CAPM
10.9%
Total Debt
1336.6
Marker Cap
36,952.20
Total Value
38,288.80
D/V
3.49%
E/V
96.51%
Discount Rate
10.72%
Termainal Growth Rate
5.22%

43. Discount Factor FY11 FY12 FY13 FY14 FY15 FY16 FY17 Net Income 1207.87
FY11
FY12
FY13
FY14
FY15
FY16
FY17
Net Income
Interest Expense After Taxes
-91.92
Increase/(Decrease) in Deferred Income Taxes
4.64
4.52
2.81
3.79
4.16
4.58
3.02
Net Operating Profit After Taxes
Add: Depreciation
391.01
434.43
475.72
500.84
534.30
570.50
609.70
Less:Change in Net Working Capital
-65.56
-73.62
-99.36
-81.07
Less: Capital Expenditures
FCF
556.78
799.73
PV of CF
502.87
652.37
995.70
908.79
925.40
941.41
Terminal Value
PV of Terminal Value
Present Value
Outstanding Debt (million)
1336.6
Shares Outstanding (million)
446.2
Est. Share Price
60.24
Current Share Price
83.02

44. Sensitivity Analysis Sensitivity Analysis Discount Factor 55.03 10%
10.00%
11%
10.72%
11.50%
12%
12.5% 4%
63.9
57.9
52.9
50.9
48.5
44.8
41.5
38.6
4.50%
69.4
62.4
56.5
54.3
51.6
47.4
43.7
40.5 5%
76.1
67.7
60.9
58.3
55.2
50.4
46.3
42.7
5.22%
79.6
70.4
63.1
60.2
57.0
51.9
47.5
43.8 6%
84.5
74.3
66.1
63.0
59.4
53.9
49.2
45.2
6.00%
95.3
82.4
72.5
68.8
64.5
58.0
52.6
48.0
Terminal growth rate

45. Negative Scenario-DCF
FY2011 E
FY2012 E
FY2013 E
FY2014 E
FY2015 E
FY2016 E
FY2017 E
Revenue Growth
14.0%
8.0%
6.0%
5.0%
-20.0%
2.5%
Phosphate - % of Revenue
54.05%
52.35%
51.00%
49.46%
47.92%
46.38%
46.27%
Potash - % of Revenue
45.95%
47.65%
49.00%
50.54%
52.08%
53.62%
53.73%
Margin
23.00%
20.00%
Dividends
$0.2
$0.3
Capital Expenditures (Mils) $ $ $ $
$2,891.68 $ $
Depreciation Expense (Mils)* $ $ $ $ $ $ $
Present Value
Outstanding Debt (million)
1336.6
Shares Outstanding (million)
446.2
Est. Share Price
16.11

46. Valuation Multiples Ave P/E* EPS(MOS) 48.39 Ave P/B* BPS(MOS) 83.92
Company
Mosaic Co. (NYSE:MOS)
Potash Corp. (NYSE:POT)
Agrium Inc. (TSX:AGU)
CF Industries Holdings, Inc. (NYSE:CF)
Price
82.02
61.44
91.01
137.87
Share Outstanding
446.2
854.3
158
71.1
P/E
44.68
31.13
19.75
27.25
P/B
4.25
7.7
2.76
2.42
Sales Per Share
15.15
7.08
66.58
55.77
P/S
5.48
8.67
1.37
2.47
Ave P/E* EPS(MOS)
48.39
Ave P/B* BPS(MOS)
83.92
Ave P/S*SPS(MOS)
59.08
Est. Share Price
63.80

47. Recommendation
The industry is very stable and the company is financially healthy, and the management’s plan for the future will also create the value for the shareholders.
However, good company is not necessarily meaning good investment.
Current market expectation of Mosaic is too far from its intrinsic value.
Based on our DCF and multiple analysis (nearly 40% overvalued), we think Mosaic’s share price is too high compared to its intrinsic value.
Decision: Stop loss at $70