Grupa Azoty – FY2020 Outlook Polluted by Plastics & Chemicals
The impact of the coronavirus crisis on the European fertilizer market will be fairly limited in our view, however the losses to the sectors of chemicals and plastics are likely to be more substantial. For Azoty's Fertilizer business, FY2020 prospects are boosted by low costs of gas, down an estimated 40% from last year, combined with one-time state compensation for high 2019 electricity costs, estimated at PLN 70-80m – factors which might drive segmental EBITDA 2% higher over the year-ago figure, i.e. to approximately PLN 988m (an upward revision of our initial PLN 950m forecast). The expectations for Fertilizers could have been even higher had it not been for first-quarter sales declines at annual rates of 4% nitrogen fertilizers and 5% multi-nutrient fertilizers. In Plastics, due to weaker demand, we anticipate sales falls of 25% y/y polyamide, 15% melamine, and 30% OXO alcohol and plasticizer this year, resulting in a segmental EBITDA loss of PLN 65m (vs. an operating profit of PLN 4m anticipated earlier). At the same time, we cut the EBITDA estimate for the Chemicals segment from PLN 161m to PLN 98m. ATT stock has edged only 4% lower since the beginning of the year, outperforming the mWIG benchmark, which shed 18%, and after a 7% rebound since our last rating on 4 March, indicating 18% outperformance vis-a-vis the WIG broad market index, we downgrade the stock two notches from buy to hold. After updating FY2020 estimates, we also lower our target price for Azoty from PLN 30.55 to PLN 28.42 per share.
Grupa Azoty is engaged in the processing of nitrogen products, the production and sales of fertilizers, the production and sales of plastics, the production and sales of oxo alcohols, the production and sales of titanium dioxide, the production and sales of melamine, the extracting and sulphur products processing, and the extracting of phosphate rock. Co. and its subsidiaries have five operating segments: Fertilizers-Agro; Plastics; Chemical; Energy, includes activities that concern production of electricity and heat; and Other Activities, which comprises other operations, such as laboratory services, rental of properties and other activities that cannot be allocated to other segments.
Set up in 1986, mBank (originally BRE – Export Development Bank) is Poland’s 4th largest universal banking group in terms of total assets and 5th by net loans and deposits at the end of June 2019. mBank has one of the oldest brokerages in Poland – we have been providing brokerage services since 1991 - and the biggest, serving about 300 ths clients.
We provide all brokerage services available in the Polish capital market (i.e. Warsaw Stock Exchange, non-public markets and forex) in a way that meets the expectations of all groups of investors, both individual and institutional. Participating in the dynamic growth of the Polish capital market since its inception, we have acquired competences and experience needed to provide the highest quality of service and we have won the trust and satisfaction of our Clients.
Over the past decade, mBank's Equity Research Team has been consistently ranked among the top research teams in Parkiet's annual institutional investor surveys (Parkiet is Poland's leading daily business newspaper). mBank analysts provide coverage on an extensive list of companies, mainly in Poland but also elsewhere in the CEE region: Austria, Czechia, Portugal, Ukraine and Hungary.
Clients get access to a comprehensive selection of research products including daily market insights, monthly roundups, macroeconomic views, industry- and company- specific analyses, investing strategies, earnings comments, etc.
We give our institutional clients numerous opportunities to connect with industry professionals, top executives, and leading analysts:
- Get direct access to senior management teams at listed companies (over 30 meetings in 2018),
- Engage in our many industry events, featuring listed Polish and global firms (in 2018, we hosted sector-themed conferences around industrials, chemical companies, telecoms, retail, and financials, and co-hosted a Best of Poland investors' with Commerzbank and the Warsaw Stock Exchange),
- Stay informed through an array of enlightening discussion panels, workshops, and briefing sessions with regulatory officials.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.