Analyst:

Muhammad Sarfraz Abbasi

Summit Capital
Sarfraz.abbasi@atlascapital.com.pk
(+92-21)-111-226-100 Ext 404
Update Pulse March 30, 2011
(Formerly Atlas Capital Markets (Pvt.) Limited)

Fertilizer Sector: Numbers spell out

(k tons)
Ind ustr y Fer ti li zer O ffta k e
2M FY10 2M FY11 YoY
HOLD
an upshot of soaring prices… UREA 984 807 -18%
Market Snapshot
D AP 162 128 -21%
Synopsis… All Fertilizers 1272 1105 -13%
Index Chg %
KSE 30 11429.64 126.56 1.12
ƒ Urea and DAP offtake declined by 18% and 21% YoY
Pakistan Research

Ind ustr y Ur ea O ffta k e KSE 100 11711.40 128.37 1.11

respectively in 2MCY11. KSE ALL 8158.93 83.34 1.03
ƒ FFBL’s urea offtake witnessed the biggest decline of (k tons) 2M FY10 2M FY11 YoY
42% YoY. FFC 418 400 -4%
ƒ ENGRO’s DAP offtake declined by 36% whereas FFBL FFBL 47 27 -42%
Key Data
reported an upsurge of 7% YoY. EN GRO 167 154 -8%
ƒ In 2MCY11, average urea and DAP prices grew by D AW H 46 37 -19% 12M Avg. Volume (m) ENGRO 4.99
35% & 34% YoY respectively. Ind ustr y DA P O ffta k e 12M Avg. Volume (m) FFC 3.26
ƒ HOLD stance recommended on FFBL and FFC. (k tons) 2M FY10 2M FY11 Chg 12M Avg. Volume (m) FFBL 9.23
12M Avg. Volume (m) DAWH 0.20
FFC - 47 NA
Total fertilizer offtake declined by 13% YoY... FFBL 70 75 7%
Total fertilizer offtake in 2MCY11 declined by 13% YoY to EN GRO 71 45 -36%
1105k tons in comparison of 1272k tons in the 12M relative performance vs KSE
D AW H - - - 150%
corresponding period of last year due to lesser
DAWH KSE-100
FFBL FFC
So urce: N FD C , Summit C ap it al R esearch 125% ENGRO
availability owing to gas curtailment. In terms of
product, both Urea and DAP offtake reported a decline 100%

of 18% and 21% YoY respectively in 2MCY11. However, Future outlook and recommendations… 75%

on monthly basis, total fertilizer offtake were seen slightly The persistent gap between demand and supply of 50%

lower by 3% YoY to 565k tons as against 581k tons in Feb fertilizers has further widen as a consequence of gas

Apr-10

Aug-10
Feb-10

Oct-10

Feb-11
Jun-10

Dec-10
Sep-10

Jan-11
Nov-10
May-10
Mar-10

Jul-10
’10. On the other hand, average per bag price of Urea curtailment in the range of 12% to 20%. This prevailing
and DAP rose by 35% and 34% respectively due to gas gap ensures demand for the locally manufactured
curtailment and higher input cost. fertilizer products which are substantially discounted
(including subsidy) in comparison of international prices.
Key players’ performance… However, we believe fertilizer affordability of farmers
Urea offtake: All the listed players posted a decline in might get hurt due to higher prices of fertilizers despite of
urea offtake where highest decline of 42% was observed higher agri income and availability of agri loans.
in FFBL to 27k tons while the lowest decline of 4% was At current levels, we recommend HOLD for FFBL (Fair
seen in FFC over 2MCY10. ENGRO’s urea offake also value of PKR45) and FFC (Fair value of PKR128).
went down by 8% to 154k tons in 2MCY11. Summit Capital (Pvt.) Ltd
DAP offtake: DAP offtake of the listed players also
B-209, Park Towers, Clifton, Karachi
remained dull as ENGRO’s DAP offtake posted a
Equity Research: Equity Sales:
substantial drop of 36% YoY to 45k tons in 2MCY11 Tel: 92 (21) 5376125 Tel: 92 (21) 5368261-8
against 71k tons in 2MCY10. On the other hand, FFBL’s Fax: 92 (21) 5376126 Fax: 92 (21) 5376122
DAP offtake increased by 7% YoY in 2MCY11. Money Market: Corporate Finance:
Tel: 92 (21) 5376128 Tel: 92 (21) 5824991
Fax: 92 (21) 5376129 Fax: 92 (21) 5376122
Disclaimer: All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time
Financial Products Distribution:
of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Summit Capital (Pvt.) Limited
Tel: 92 (21) 5376125
accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is
Fax: 92 (21) 5376126
provided without warranty and Summit Capital (Pvt.) Limited makes no representation of warranty of any kind as to the accuracy or completeness of any
information hereto contained.