JS Securities Limited – Morning Briefing

Karachi, December 06, 2018 (PPI-OT): Fertilizers: Urea sales likely to dip 15% YoY in Nov-2018

Domestic urea offtake in Nov-2018 is expected at ~511k tons, down by 15% YoY.

Urea production is estimated at 527k tons primarily due to resumption of operations by DH Fertilizers and Agritech limited (AGL).

Cumulative sales during 11M2018 in urea is expected to turn flat; down by 1% YoY to 5.0mn tons. Fatima group and Agritech (AGL) are expected to outperform its peers with off-take accretion of 99% YoY and 16x YoY, respectively.

DAP sales are expected at 265k tons; significantly down by 32% YoY, while production and cumulative imports are anticipated around 348k tons, respectively.

That said inventory levels of Urea industry as at Nov-2018 are expected to clock in at 232K tons, while DAP inventory in the same period is estimated to settle at 588k tons.

Urea sales likely to decline to 511k in Nov-2018

Domestic urea offtakes for the month of Nov-2018 is expected at ~511k tons, down by 15% YoY, where offtakes are expected to depict 21% attrition in contrast to NFDC expectation of 650k tons as published in its recent report. Whereas taking last 5 years sales in to account, industry offtakes are estimated to decline by 15% YoY. Cumulative urea offtake during 11M2018 is expected to drop by 1% YoY to 5.0mn tons as compared to 5.1mn tons in the corresponding period last year.

Fauji group sales to dent by new producers

Cumulative sales of Fauji Fertilizer (FFC) and Fauji Fertilizers Bin Qasim (FFBL) are expected to decline by 31%YoY while market share of Fauji group is estimated to clock in at 48% vis-à-vis 59% during Nov-2017, owing to initiation of production by LNG-based players. Engro Fertilizers (EFERT) sales are also expected decline by 20% YoY to 155K tons as compared to 195k tons during Nov-2017. On the other hand, sales from both plants of Fatima Fertilizer (FATIMA) are estimated to record off-take growth of 99% YoY to 80k tons. Cumulatively for 11M2018, FFC and EFERT are anticipated to post 7% and 4% YoY higher sales, respectively.

DAP sales growth likely to turn negative

DAP offtake in the month is estimated to plunge by massive 32% YoY to 265k tons as compared to 387k tons in the corresponding period last year. However, cumulative sales of the industry is expected to remain on the upward trajectory, depicting a growth of 3% YoY to 1.7mn tons. Inventory of the said segment is expected to clock in at 588k tons, broadly led by higher imports by EFERT.

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JS Securities Limited – Morning Briefing

Karachi, December 06, 2018 (PPI-OT): Fertilizers: Urea sales likely to dip 15% YoY in Nov-2018

Domestic urea offtake in Nov-2018 is expected at ~511k tons, down by 15% YoY.

Urea production is estimated at 527k tons primarily due to resumption of operations by DH Fertilizers and Agritech limited (AGL).

Cumulative sales during 11M2018 in urea is expected to turn flat; down by 1% YoY to 5.0mn tons. Fatima group and Agritech (AGL) are expected to outperform its peers with off-take accretion of 99% YoY and 16x YoY, respectively.

DAP sales are expected at 265k tons; significantly down by 32% YoY, while production and cumulative imports are anticipated around 348k tons, respectively.

That said inventory levels of Urea industry as at Nov-2018 are expected to clock in at 232K tons, while DAP inventory in the same period is estimated to settle at 588k tons.

Urea sales likely to decline to 511k in Nov-2018

Domestic urea offtakes for the month of Nov-2018 is expected at ~511k tons, down by 15% YoY, where offtakes are expected to depict 21% attrition in contrast to NFDC expectation of 650k tons as published in its recent report. Whereas taking last 5 years sales in to account, industry offtakes are estimated to decline by 15% YoY. Cumulative urea offtake during 11M2018 is expected to drop by 1% YoY to 5.0mn tons as compared to 5.1mn tons in the corresponding period last year.

Fauji group sales to dent by new producers

Cumulative sales of Fauji Fertilizer (FFC) and Fauji Fertilizers Bin Qasim (FFBL) are expected to decline by 31%YoY while market share of Fauji group is estimated to clock in at 48% vis-à-vis 59% during Nov-2017, owing to initiation of production by LNG-based players. Engro Fertilizers (EFERT) sales are also expected decline by 20% YoY to 155K tons as compared to 195k tons during Nov-2017. On the other hand, sales from both plants of Fatima Fertilizer (FATIMA) are estimated to record off-take growth of 99% YoY to 80k tons. Cumulatively for 11M2018, FFC and EFERT are anticipated to post 7% and 4% YoY higher sales, respectively.

DAP sales growth likely to turn negative

DAP offtake in the month is estimated to plunge by massive 32% YoY to 265k tons as compared to 387k tons in the corresponding period last year. However, cumulative sales of the industry is expected to remain on the upward trajectory, depicting a growth of 3% YoY to 1.7mn tons. Inventory of the said segment is expected to clock in at 588k tons, broadly led by higher imports by EFERT.

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