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Integrated Equities
Integrated Equities PVT Ltd seeks to do business with companies covered in its research report. As a
result Individual and Institutional Investors should be aware that “IEL” may have conflict of interest that
could affect the objectivity of this report. This report is provided for information purposes only. The
information and opinions contained herein have been compiled with sources believed to be reliable and
in good faith. Such information has not been independently verified as to its accuracy.
Key Highlights:
Sector Fertilizer
P/E (Based on Annual EPS) 7.62
P/BV (Based on latest financials) 3.10
ROE (Based on latest Financials) 40.57%
ROA (Based on latest financials) 19.61%
MCAP (PKR Bln) 469.61
Total Listed Companies 7
Avg Volume (Mln) (52 Weeks) 1.26
Muhammad Umair Altaf
+92-42-35741714-15
http://www.jamapunji.pk/
Research Entity Notification No. (REP-239) 03 -Oct-2016
Pakistan Fertilizer Sector Urea off-take of the industry dropped by 26%MoM but provided a rise of
34%YoY. DAP off-take of the industry surged at a larger scale compared to Urea
on YoY basis as increased by 298% while slump of 32% is observed on MoM
basis.
NP off-take followed the above trend, rising by 114%YoY whereas sliding down
by 41%MoM. However, hike is witnessed in CAN off-take of 95%YoY and
156%MoM.
Urea production of the industry represented an escalation of 8%YoY and
reduction of 5%MoM. Demand stance allowed improvement for Urea inventory
of the industry as it has come down further to 1.3MT in Aug-CY16 from 1.4MT
in July-CY16.
Urea imports remained nil as usual due to surplus inventory. Imports for DAP
were clocked in at 85.89KT in August raising cumulative imports to 489.5KT.
August-CY16 off-take: As per the data released by NFDC, total fertilizer off-take
clocked in at 842.5KT i) Urea off-take were 574KT (100% domestically
manufactured), down by 32%MoM while up by 34%YoY ii) DAP off-take were
about 134KT (49KT domestically manufactured + 86KT imported), witnessed a
tremendous hike of 298% over Aug’15 but dipped by 32%MoM iii) CAN off-take
clocked in at 81KT (100% domestically manufactured), registered a growth of
95%YoY as well as 156%MoM iv) NP off-take of 43KT (100% domestically
manufactured), up by 114%YoY whereas down by 41%MoM. Increase in off-take,
on YoY basis, of urea and DAP was mainly due to the realization of subsidies on
nitrogenous and phosphoric fertilizers. On cumulative basis, Urea, DAP, CAN and
NP off-takes have reached at 3,175KT, 822KT, 305KT and 405KT giving a
performance of -16%YoY, 42%YoY, -10%YoY and 29%YoY respectively.
(Source: NFDC, IEL Research)
Page 2
Integrated Equities
Integrated Equities PVT Ltd seeks to do business with companies covered in its research report. As a
result Individual and Institutional Investors should be aware that “IEL” may have conflict of interest that
could affect the objectivity of this report. This report is provided for information purposes only. The
information and opinions contained herein have been compiled with sources believed to be reliable and
in good faith. Such information has not been independently verified as to its accuracy.
Production, Imports and Inventory: Production of all fertilizer products during
August-CY16 was about 727KT, out of which urea production was about 503KT
(8%YoY, -5%MoM). Other products were: DAP 71KT, CAN 64KT, NP 68KT, SSP
9KT and various grades of NPK 10KT. Total imported supplies were 63KT
comprises of 62KT of DAP, 1KT of MOP, 0.2KT of SSP and 0.2KT of SOP. Overall
industry’s inventory position at the end of August-CY16 was 1,343KT of Urea,
395KT of DAP, 109KT of NP, 375KT of CAN, 37KT of SSP, 6.9KT of SOP, 7.29KT of
MOP, 3.1KT of AS and 14KT of NPK from total availability in August-CY16 of
1,917KT of Urea, 529KT DAP, 152KT of NP, 456KT of CAN, 39.5KT of SSP, 7.5KT of
SOP, 7.9KT of MOP, 4.4KT of AS and 18.7KT of NPK.
(Source: NFDC, IEL Research)
FFC: Company’s fertilizer mix comprised of i) Urea Off-take of 230KT showed a
decline of 26%MoM while up by 19%YoY, reaching cumulative off-take of
1,483KT (-9%YoY) in CY16 ii) DAP off-take of 4KT (238%YoY, -57%MoM) moved
cumulative off-take to 43KT (178%YoY) in CY16.
EFERT: Company’s fertilizer mix comprised of i) Urea off-take of 150KT (2%YoY,
-45%MoM) ii) DAP off-take of 19KT depicted an excellent performance of
236%YoY while down by 73%MoM iii) NP off-take of 3KT (131%YoY, -41%MoM).
Cumulative off-takes of the company for CY16 have reached at 950KT of Urea
(-23%YoY), 209KT of DAP (40%YoY) and 26KT of NP (-35%YoY).
FFBL: Urea and DAP off-takes of the company were 55KT (34%YoY, -35%MoM)
and 49KT (105%YoY, -28%MoM) with cumulative off-take of 296KT (79%YoY) and
283KT (-10%YoY) respectively.
FATIMA: Company generated off-take of 72KT for Urea (390%YoY, 144%MoM),
54KT for CAN (102%YoY, 98%MoM) and 23KT for NP (437%YoY, -65%MoM).
Cumulative off-take of the company were recorded at 175KT for Urea (-35%YoY),
209KT for CAN (-29%YoY) and 296KT for NP (52%YoY).
400,000
420,000
440,000
460,000
480,000
500,000
520,000
540,000
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16
Urea Production (Tons)
Page 3
Integrated Equities
Integrated Equities PVT Ltd seeks to do business with companies covered in its research report. As a
result Individual and Institutional Investors should be aware that “IEL” may have conflict of interest that
could affect the objectivity of this report. This report is provided for information purposes only. The
information and opinions contained herein have been compiled with sources believed to be reliable and
in good faith. Such information has not been independently verified as to its accuracy.
Investor Perspective: We expect higher demand for the Rabi sowing season
following the massive relief announced in budget in form of subsidy will further
improve the performance of the Fertilizer Sector. Suggestion of including
agriculture sector in CPEC by the Federation of Pakistan Chambers of Commerce
& Industry (FPCCI) will help to increase exports of agriculture products to Asian
Markets will also create demand for fertilizer products if accepted. Since the
major crop of the Rabi season is wheat and the imposition of 60% duty on
imports will move the consumers towards local production, gives hint of coming
production increase, hence demand for fertilizer.
(Source: NFDC, IEL Research)
(Source: NFDC, IEL Research)
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16
Urea Off-take by Entity
FFC
FFBL
FATIMA
EFERT
Others
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16
DAP Off-take by Entity
FFBL
FFC
EFERT
Others
Page 4
Integrated Equities
Integrated Equities PVT Ltd seeks to do business with companies covered in its research report. As a
result Individual and Institutional Investors should be aware that “IEL” may have conflict of interest that
could affect the objectivity of this report. This report is provided for information purposes only. The
information and opinions contained herein have been compiled with sources believed to be reliable and
in good faith. Such information has not been independently verified as to its accuracy.
(Source: NFDC, IEL Research)
(Source: NFDC, IEL Research)
-
10,000
20,000
30,000
40,000
50,000
60,000
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16
CAN Off-take by Entity
FATIMA
Others
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16
NP Off-take by Entity
EFERT
FATIMA
Others
8MCY16 8MCY15 YoY Aug-16 Aug-15 YoY July'16 MoM
Urea
Industry 3,175 3,765 -16% 574 429 34% 778 -26%
Domesticly Manufactured 3,161 3,330 -5% 574 412 39% 778 -26%
Imported 14 434 -97% 0.09 17 -99% - NM
FFC 1,483 1,622 -9% 230 194 19% 312 -26%
FFBL 296 165 79% 55 41 34% 85 -35%
FATIMA 175 269 -35% 72 15 390% 29 144%
EFERT 950 1,238 -23% 150 147 2% 272 -45%
Others 272 471 -42% 0.07 32 -100% 79 -100%
DAP
Industry 822 580 42% 134 34 298% 199 -32%
Domesticly Manufactured 283 314 -10% 49 24 105% 68 -28%
Imported 539 267 102% 86 10 754% 131 -35%
FFBL 283 314 -10% 49 24 105% 68 -28%
FFC 43 16 178% 4 1 238% 10 -57%
EFERT 209 149 40% 19 6 236% 69 -73%
Others 287 102 180% 0.06 3 -98% 53 -100%
CAN
Industry 305 339 -10% 81 42 95% 32 156%
Domesticly Manufactured 305 339 -10% 81 42 95% 32 156%
Imported - - NM - - NM - NM
PAK ARAB 96 44 120% 28 15 83% 5 490%
FATIMA 209 295 -29% 54 27 102% 27 98%
Others - - NM (0.00) - NM - NM
NP
Industry 405 313 29% 43 20 114% 74 -41%
Domesticly Manufactured 405 313 29% 43 20 114% 74 -41%
Imported 0.28 0.09 222% - - NM - NM
EFERT 26 40 -35% 3 2 131% 6 -41%
PAK ARAB 83 79 5% 17 15 - 2 592%
FATIMA 296 195 52% 23 4 437% 66 -65%
Others 0.28 0.09 222% - - NM - NM
Urea Production (Tons'000) 8MCY16 8MCY15 YoY Aug-16 Aug-15 YoY July'16 MoM
FFC (Prilled) 1,677 1,615 4% 208 215 -3% 217 -4%
FFBL (Granular) 306 169 80% 43 35 24% 44 -1%
Fatimafert 231 11 1956% 38 - NM 36 5%
FATIMA 342 286 20% 45 36 24% 40 11%
PAK Arab 13 - NM 10 - NM 2 446%
EFERT 1,234 1,303 -5% 156 182 -14% 156 0%
PAFL (AZGARD) - Agritech 174 39 346% 4 - NM 33 -89%
Total 3,978 3,424 16% 503 468 8% 528 -5%
Fertilizer Off-take (Tons''000")
Page 5
Integrated Equities
Integrated Equities PVT Ltd seeks to do business with companies covered in its research report. As a
result Individual and Institutional Investors should be aware that “IEL” may have conflict of interest that
could affect the objectivity of this report. This report is provided for information purposes only. The
information and opinions contained herein have been compiled with sources believed to be reliable and
in good faith. Such information has not been independently verified as to its accuracy.
DISCLAIMER
This information and opinion contained in this report have been complied by our research department from sources believed by it to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in the document constitute the department’s judgment as of the date of this document and are subject to change without notice and are provided in good faith but without legal responsibility.
This document by no means is to be construed as Prospectus for raising money. The information contained in is just for advisory purposes and any investment decision based on this document will solely be the investors’ discretion. Circulation of this information memorandum by other than IEL is strictly prohibited. This report is not, and should not be construed as, an offer to sell or a solicitation of an offer to buy any securities. Integrated Equities (Pvt) Ltd (the company) or persons connected with it may from time to time have an investment banking or other relationship, including but not limited to, the participation or investment in commercial banking transactions (including loans) with some or all of the issuers mentioned therein, either for their own account or the account of their customers. Persons connected with the company may provide or have provided corporate finance and other services to the issuer of the securities mentioned herein, including the issuance of options on securities mentioned herein or any related investment and may make a purchase and/or sale, or offer to make a purchase and/or sale of the securities or any related investment from time to time in the open market or otherwise, in each case either as principal or agent.
Integrated Equities (Pvt) Limited, their respective affiliate companies, associates, directors and/or employees may have investments in securities or derivatives of securities of companies mentioned in this report, and may make investment decisions that are inconsistent with the views expressed in this report. Neither the company nor any of its affiliates, nor any other person, accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained therein.