Pakistan Fertilizer_Divergent trend in Dec’20 offtakes, (AKD Daily, Jan 26, 2021)
AKD Daily Pakistan Fertilizer: Divergent trend in Dec’20 offtakes · As per the NFDC data released, urea offtake increased 65% MoM to 880K tons, but posted a decline of 35% YoY in Dec’20 (high base effect). This takes CY20 offtake to 6.0mn tons, flattish YoY. The urea inventory build-up witnessed in previous month normalized to 299K tons, down 55%MoM. · DAP offtake, on the other hand, declined 44%MoM, but increased 6%YoY to 205K tons in Dec’20. Sequential decline is visible industry-wide, where unavailability of DAP in international markets, and low local inventory are the major reasons. For full year CY20, FFBL witnessed an upsurge of 35%YoY in DAP offtake, grabbing a market share of 43% vs. 34% SPLY. · Local DAP prices have increased by PkR550/bag in Jan’21 alone, where supply side shock may result in continued upward momentum in DAP prices in 1HCY20, in our view. Local urea prices are also on a similar trajectory (up c. PkR75/bag FYTD), likely to pass on the adverse impact of budgetary measure w.r.t income tax (PkR45-50/bag for EFERT and FFC on annual basis). · We also present one-off adjustments in 4QCY20E earnings w.r.t GIDC and reversal of provisions recorded in lieu of sales tax adjustment (refer to table). FFC continues to be our preferred pick for its defensive attributes and healthy EBITDA margins which will enable the company to sustain its D/Y north of 10% in CY20/21F vs. 3yr PIB rate of 8.68%. AKD Research
Fauji Fertilizer is engaged in the manufacturing, purchasing and marketing of fertilizers including the investment in other fertilizer manufacturing operations. As of Dec 31 2004, Co. had a design capacity of 2,455,000 tonnes for urea production and 445,000 tonnes for DAP production.
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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