Resuming with an Overweight rating; unparalleled growth ahead
We see no upward scope for urea prices, not as a result of the oil price slump (although this likely played a role in India’s decision to restart naphtha-based plants, potentially lowering import demand by an estimated 15% all else constant), but more so on account of two downward pressures. First, corn and soybean prices are down. Given industry operating rates remain relatively low (77.5% in 2014), we believe producers are unlikely to have much bargaining power against farmers and fertilizer remains 22% of US farmer production costs. The second source of downward pressure we see on urea prices going forward is surging export supply from China. Last year China exported 13.6mn tonnes of urea, 64.7% more y-o-y. With China now representing as much as 30% of world trade, the government’s 2015 export tax reduction (to a flat fee of USD12.8/t) means product will find its way at lower prices than in 2014. These reasons have us expecting a floor urea price of USD300/t and ammonia price of USD450/t in 2015 and thereon, assigning netback premiums for OCI N.V.’s plants in strategic locations.
OCI produces and sells nitrogen based fertilizers and industrial chemicals. Co. offers a portfolio of nitrogen fertilizers and industrial chemicals, including anhydrous ammonia, granular urea, urea ammonium nitrate, calcium ammonium nitrate, methanol, and melamine for agricultural and industrial customers. Co. also provides engineering and construction services primarily with a focus on infrastructure, industrial, and highend commercial projects, such as conventional power and renewable energy, petrochemicals, oil and gas, water and wastewater, and transportation infrastructure in the United States, Europe, the Middle East, Africa, and Central Asia for public and private clients.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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