Pakistan Fertilizer_Seasonality leads to a dip in urea offtake, (AKD Daily, Apr 26, 2021)
AKD Daily
Pakistan Fertilizer: Seasonality leads to a dip in urea offtake
- As per the numbers released by NFDC, urea offtake declined 16% MoM to 343K MT. The sequential decline in numbers was witnessed industry wide due to seasonality factor. EFERT remained at the forefront, due to a low base effect in the same period previous year.
- The overall urea inventory improved to 297K MT vs. ~130K MT in Feb’21, but still is down 50%YoY. The GoP’s decision to supply LNG to hitherto closed fertilizer plants for 10 months may continue to improve inventory levels and reduce upside pressure on urea price.
- DAP offtake on the other hand increased 63/81% MoM/YoY to 143K MT, taking 1QCY21 DAP offtakes to 314K MT, up 49% YoY, with FFC leading the show.
- DAP inventory at Mar’21 end stood at 55K MT, down 89% YoY due to lack of availability in global markets. DAP prices currently hover at around PkR5,400 – 5,500/bag, vs. international DAP prices implying local prices still at a discount.
- We continue to like FFC from the fertilizer space due to healthy EBITDA generation and D/Y of 11.5% on offer. Meanwhile, bull cycle in DAP prices comes at seasonally slow period, diluting its potential impact on FFBL’s earnings in 1HCY21, where upside risk emanates from continued bullish trend in DAP prices in 2HCY21.
AKD Research
Fauji Fertilizer Bin Qasim Limited is a Pakistan-based holding company. The Company manufactures, purchases and markets fertilizers. It is involved in meat, dairy and coal based energy generation sectors. It has identified its potential business segments and has undertaken investments in the areas of food, financial, power sector and wind energy projects. Its products include Granular Urea, such as Sona Urea, and Di Ammonium Phosphate (DAP), such as Sona DAP. Sona Urea is a synthetic organic compound containing nitrogen in amide form available in the form of white solid prills. It is applied to soil and also suitable in solution form as spray application. Sona DAP contains nutrient element, phosphorous besides nitrogen available in flowing granular form Granules are stronger, harder and of uniform size. It is suitable for various crops and soils recommended for initial application. It produces over 791,260 metric tons (MT) of DAP and approximately 433,610 MT of Urea.
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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