Pakistan Fertilizer: Risks on the horizon, (AKD Daily, Dec 30, 2019)
- As per data released by NFDC, Urea offtake declined 23% YoY to 380K tons in Nov’19, while showing recovery on a sequential basis. This takes 11MCY19 urea offtake to 4.8mn tons, down 4% YoY. The ending inventory stands at 1,041K tons in Nov’19 vs. 245K tons in Nov’18.
- Company-wise, Urea offtake declined across the industry with EFERT/FATIMA witnessing lowest/highest decline. DAP offtake, on the other hand, increased 53/49% YoY/MoM in Nov’19, containing the 11MCY19 DAP offtake decline at 10%.
- In line with the 11MCY19 offtakes, we revise down our urea offtake assumptions for AKD Fertilizer Universe by 3-10% for CY20, with limited improvement in following years, backed by our expectation of continued operations of LNG based plants in medium term.
- We believe sector’s price performance will remain a function of (i) demand supply situation (ii) pricing power amid potential gas price hikes and (iii) Supreme Court’s ruling on the GIDC scenario. We thus advise investors to remain cautious on the sector.
AKD Research
Fatima Fertilizer Company Limited is a Pakistan-based fertilizer manufacturing company. The Company is engaged in manufacturing and marketing of Nitrogen, Phosphate and Potash fertilizers. It produces a range of fertilizers, including Sarsabz Calcium Ammonium Nitrate (CAN), Sarsabz Nitro Phosphate (NP), Nitrogen Phosphorous Potassium (NPK) and Sarsabz Urea. Its CAN is a granulated nitrogenous fertilizer. Sarsabz Urea can be applied in various forms and it can be spread in bulk alone or can also be mixed with other fertilizers before application. Its NP can be applied on various types of soils. The Company has a production base for Nitric Acid. The Company has annual production capacity of Urea 500,000, CAN 420,000, NP 244,000, Nitric Acid 500,000 and Ammonia 500,000. It also offers services and support to farmers from education on farming practices and research oriented agricultural practices.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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