Raise 12M TP by 36%, on favourable industry dynamics. We raise 2022-24e EBITDA for MOPCO by an average of 24%, on higher urea price assumptions to reflect a more protracted period of tightness in global urea supply. Developments in Russia have a two-fold bearing on urea; by reducing export supply from Russia (c18% of the global urea merchant market), as well as placing upward cost pressure on European gas-based production. On our new 12M TP for MOPCO of EGP174/share, we see ~91% upside on the st...
The independent financial analyst theScreener just awarded an improved star rating to MISR FRETILIZERS (EG), active in the Speciality Chemicals industry. As regards its fundamental valuation, the title receives an improved star rating and now shows 1 out of 4 possible stars. Given its market behaviour as moderately risky, theScreener considers that these elements allowing slightly upgrading its general evaluation to Neutral; the title, however, remains unattractive. As of the analysis date Febru...
Cut 12M TP by 10%. We update our forecasts to reflect: i) higher than previously expected export prices, ii) a local quota of 55% (30% previously), but at the 47% higher local urea subsidy price (USD287/t), gradually reaching full liberalisation of USD340/t by 2027e, and iii) 2023-27e average gas price of USD5.9/mmBtu. This gas price is +1.7x vs. the formula implied gas price (so far in place), as the government demonstrates increased involvement to maximise its profit windfall from elevated com...
LOCAL QUOTA PRICES AND VOLUMES ADJUSTED TO NARROW THE GAP WITH INTERNATIONAL PRICES AND IN TANDEM WITH RECENT HIKE IN GAS COST In a move to narrow the gap between local quota fertilizer prices and international pries, nitrogenous fertilizer producers are now required to supply 55% of their production to the Ministry of Agriculture, a percentage equivalent to about 3.7 million tons annually, which covers the demand of the local market. Local prices have been raised from EGP2,900 per ton to EGP...
UREA MARKET IS TEARING IT UP Just as the pandemic dragged Urea prices in early 2020, it appears to have completely turned a corner and grew into a contributor to the rally, albeit in an implicit way as prices hit (USD950/ ton in Egypt, USD875/ton in Europe, USD750/ton in North America and lastly USD625/ton in China). Prices have been buoyed by several factors, including: i) the ensuing energy crunch in Asia and Europe, which forced major urea producers to scale back production, and in some ca...
Urea fundamentals beat. Granular urea prices have risen c170% y-t-d to USD752/t (Egypt, fob), spurred by rising energy costs. Europe’s energy crisis has sent natural gas prices to a record USD31/mmBtu (Dutch TTF gas hub), and a cutback on coal production in China has propelled the price of coal (c75% of its urea production) to a 2012-21 high of USD153/t. This situation will likely persist over 1Q22. While crop inventory is low, we predict that the combination of: i) new urea capacity hitting the...
SALES, MARGINS, AND EARNINGS BOOM ON UREA PRICE RALLY MOPCO achieved a 2Q21 sales figure of EGP2,186 million (+9% QoQ, +12% YoY), primarily boosted by the ongoing rally in urea prices. Gross profit for the quarter hit EGP1,235 million (+19% QoQ, +43% YoY), implying a GPM of 56.5%. The healthy GPM could be also heavily attributed to the urea price rally, alongside modest levels of feedstock costs. The strong gross profit figure filtered down to the company’s EBITDA as It recorded EGP1,425 mill...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
In this report we assess the average material prices for 2Q21 and depict the impact of pricing trends on the financial performance of the relevant listed equities in Egypt. Prices of raw materials in the food and beverages sector continued to normalize in 2Q21, except for prices of SMP and WMP. Accordingly, we expect a gradual recovery of margins to appear in the 3Q21 results of JUFO, EFID, DOMT and OLFIas price increases kick in and with seasonality of revenues. Most companies have an invent...
Value proposition in good industry times. MOPCO stock is up over 106% y-o-y, but still trades c67% less than the sector on a 2022e EV/EBITDA of 2.7x (P/E of 5.3x). It offers strong cash generation, with a 2022e FCFE yield of 10% (+12pp to 22% in 2023e even at USD280/t for urea c30% lower than spot), availing faster deleveraging (debt-free by end-2022) and DPS expansion; 2021e dividend yield of 6.6%, rising to 10.6% in 2022e. Our base case factors a EGP2.2bn deduction as the PV of deferred tax pa...
SALES SURGE AIDED BY UREA PRICES, NOTING SEQUENTIAL MARGIN PRESSURE MFPC released its consolidated financials for 1Q21. Sales recorded EGP1,996 million (+7%% Qo+11%YoY). We believe: 1) urea prices were the primal reason for the sequential hike in sales figure, given urea prices were up 29%QoQ and 43%YoY, 2) Volumes sold declined sequentially and yearly by 17% and 22%, respectively. Gross margin for the quarter came in at EGP1,038 implying a GPM of 52.0% vs 4Q20’s GPM of 51.9%, which cements o...
We present the 1Q21 material prices that are relevant to the petrochemical, consumer and industrial & materials sectors. In our 12-page report, we depict the impact of such changes on the financial performance of listed equities in Egypt. We also present the quarterly breakdown of each sector. Most companies have inventory of raw material that covers somewhere around 2-3 months. The increase in raw material costs is slowing down in 2Q21. Accordingly, we expect the pressure on margins to appe...
Nitrogen fertilizers endured – like many of its chemical peers – a tricky year in 2020 with regards to price fluctuations as markets around the globe learnt to adjust with the blitz of a global pandemic. Urea prices had flirted with lows of USD200/ton for a sizeable portion of 2020 before normalizing at the acceptable level of USD245/ton. Currently, most urea indices that we track are hovering around the very healthy levels of USD300-350/ton bolstered by I) Soaring grain prices that are drive...
A value play tinted with healthy industry dynamics. We reinitiate coverage on MOPCO, Egypt’s biggest urea producer, with a TP of EGP100/share, implying a 2021e EV/EBITDA of c6x, in line with industry’s historical average. Our DCF factors in: i) a 2020-27e fixed urea price of USD270/t, broadly in line with the five-year historical average vs. the current spot price of USD345/t, ii) an unchanged gas price of USD2.7/mmBtu, on our calculations, and iii) deducting EGP3.2bn deferred tax liabilities fr...
Sales dip quarterly; hindered by currency and Urea pricing MFPC released its consolidated financials for 3Q20. Sales recorded EGP1,712 million (-12% QoQ, -7%YoY). As remarked, the dip in sales can be mainly attributed to the two usual suspects, the exchange rate and international urea pricing. The former oversaw a 4%YoY appreciation, while the latter witnessed a c. 11.5% YoY decline. We remind you that MFPC exports more than 80% of its output. Cost efficiencies help lift margins Gross profit ...
Volumes boost sales amid low urea prices... Net sales for the quarter recorded EGP1,959 million (+9% OoQ, -3%YoY). We assume that the hike in the sales figure was attributed to MFPC running its capacities at full rate and maximizing sales volume, in light of some inventory piling up happening from international clients, as a result of the pandemic lock downs. That is in addition to the weaker EGP in 2Q20, since Egypt’s urea spot priced averaged USD231/ton (-7%QoQ, -16%YoY). ...But margins fac....
UREA MARKET NOT IMMUNE TO BEARISH CONTAGION Earlier in March, the global urea market seemed resistant to the devastating impact of covid-19 as prices edged up to c.USD260/ton. However, since then, China has begun exporting more fertilizers, and Indian tenders have been weak on the demand side, pressuring prices to current lows of USD200/ton. Market research providers suggest plants could go offline soon in a bid to reduce the supply glut. All things considered, we remain conservative as we as...
Reiterate our positive stance on nitrogen fertiliser players. The incremental rise in Egypt fob urea price during 3Q18, crossing the USD300/t mark, which did not come to our surprise, has been further boosted by Iran’s exclusion from India’s tenders due to the former’s status as a sanctioned country. This has buoyed urea prices, currently hovering around USD335/t, with average 2018 y-t-d Egypt fob urea price of cUSD277/t, surging 16% y-o-y, solidifying our positive stance. With winter just aroun...
Global supply/demand outlook implies strengthening urea prices. We maintain our positive outlook on the nitrogen fertiliser sector, on: i) supply growth falling lower than global demand growth, closing the oversupply gap, ii) Chinese exports remaining at lower levels (-74% y-t-d), iii) the US’ decision to pull out of the Iran nuclear deal to hit the country’s urea exports, and iv) steady demand from India (+43% y-t-d), as progress with new greenfield investments has been limited. We hold our 201...
Unfortunately, this report is not available for the investor type or country you selected.
Report is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.