Report
EUR 9.06 For Business Accounts Only

Pakistan Fertilizer: Pricing confusion hit urea offtake in Jul’19, (AKD Daily Aug 28, 2019)

  • Urea offtake for Jul’19 clocked in at 464K tons, down 28/7% MoM/YoY, taking cumulative 7MCY19 urea offtake to 3.3mn tons, up 2% YoY. The decline in Jul’19 urea offtake is accounted for by lack of clarity on Urea pricing and GIDC settlement issue, in our view.
  • Company-wise, Urea offtake declined across the industry, except for EFERT, whose offtake remained flattish YoY as well as MoM. Urea offtakes of FFC and FFBL declined by 18/37% on YoY basis and, a more notable 33/62% on MoM basis, respectively. The Urea inventory closed at 374K tons, up 1.1/4.3x MoM/YoY. 
  • DAP offtake during the month, on the other hand, improved 28/6% MoM/YoY to 202K tons led by seasonality factor and potential price hikes during upcoming Rabi season, taking cumulative 7MCY19 DAP offtakes to 766K tons, flattish YoY. While DAP offtake improved sequentially across players, only FFBL fared better in 7MCY19 (38% YoY higher DAP offtake of 301K tons).
  • The GoP has decided to introduce a presidential ordinance to settle 50% of GIDC receivable from gas consumers (~PKR40bn from Fertilizer sector). As per the proposal in Jan’19, prospective reduction in GIDC rates will be applicable for only those who clear 50% of the outstanding GIDC overdues. We await clarity in this regard before incorporating the same in our models.

AKD Research

Underlying
Fauji Fertilizer Co. Ltd.

Fauji Fertilizer is engaged in the manufacturing, purchasing and marketing of fertilizers including the investment in other fertilizer manufacturing operations. As of Dec 31 2004, Co. had a design capacity of 2,455,000 tonnes for urea production and 445,000 tonnes for DAP production.

Provider
AKD Securities Limited
AKD Securities Limited

AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.

AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.

Analysts
Ailia Naeem

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