Fertilizer Sector: Offtake recovers on improving seasonal demand
- Headline fertilizer offtake for Nov'16 improved significantly with YoY growth of 23%/17%/18%/25% for Urea/DAP/NP/CAN, respectively. Industry wide growth in offtakes is primarily attributable to seasonal demand (Rabi season) and subdued local fertilizer prices.
- During 11MCY16, FFC/FFBL remained key outperformers with 2%/77%YoY growth vs. -1%YoY growth of industry. EFERT/FATIMA, on the other hand, faced serious challenges with decline in offtake by 15%/7%YoY. Continuation of DAP subsidy in FY17 and lower prices kept dynamics healthy for DAP with offtake growth of 16%YoY.
- By end Nov’16, Urea inventory closed at 1.45mn tons, up 56%YoY led by 14%YoY higher production and marginal decline in offtakes (down 1%YoY). That said, pricing cap of PkR1,400/bag coupled with substantial inventory has stiffened price competition. We are currently market-weight on the sector.
Engro Fertilizers Limited is a Pakistan-based company, which is engaged in manufacturing, purchasing and marketing of fertilizers. The Company's brands include Engro Urea, Engro NP, Engro DAP, Zingro, Engro MOP, Engro SSP and Engro Zarkhez. Engro NP is the Company's fertilizer brand with Nitrogen and Phosphorous content in equal quantity. Engro DAP primarily contains Di-Ammonium Phosphate, and is imported by Engro EXIMP and marketed by the Company. Engro DAP is marketed in approximately 50 kilogram bags. Zingro is a micronutrient fertilizer, and is imported by Engro EXIMP and marketed by the Company. Engro Zarkhez has Nitrogen, Phosphorous and Potassium, and is primarily offered for sugar cane, fruit orchards, vegetables, potato and tobacco farming. Engro Envy is primarily offered to urban market for gardens, lawns, flower beds, fruit plants and ornamental plants. The Company is a subsidiary of Engro Corporation.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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