The document summarizes the outlook for Pakistan's fertilizer sector in 2011. It notes that production of urea and DAP is increasing, but has not kept up with rising capacity due to gas shortages. This has led fertilizer prices to rise substantially. The document recommends buying stock in FFC, FFBL and Engro, the major fertilizer producers in Pakistan, due to their higher earnings growth, dividends and returns relative to regional competitors. It maintains a positive outlook for the sector.
This document summarizes key points from a presentation on doubling farmers' income in India. It notes that the government set up a committee in 2016 to develop a plan to double farmers' income by 2022. The committee report recommends increasing investment in agriculture by Rs. 640,000 crores, with 80% of funds coming from the government. It also suggests increasing the share of farm income from 60% to 69% by improving productivity, reducing costs and wastage, and facilitating diversification. However, the document questions some inconsistencies and whether resources can be mobilized given other spending priorities. It analyzes growth trends and argues for market reforms to truly incentivize farmers.
Vijay Paul Sharma, a professor at the Indian Institute of Management Ahmedabad, presented on the key issues around India's fertilizer subsidy program. He discussed trends showing rising fertilizer consumption but stagnant production, leading to increasing imports. While subsidies are meant to benefit farmers, analysis shows large fertilizer companies and large/commercial farms benefit more. Small and marginal farmers do see income gains from subsidies but imbalanced nutrient use is a problem. The large and growing cost of subsidies also presents a fiscal challenge for the government. Sharma concludes by arguing for rational pricing, balanced nutrient use through extension services, increasing domestic production capacity, and better targeting of subsidies.
Yara Fertilizer Industry Handbook
This handbook describes the fertilizer industry and in particular the nitrogen part which is
the most relevant for Yara International.
The document does not describe Yara or its strategies. For information on Yara-specific
issues please see the Capital Markets Day presentations.
Fertilizers are essential plant nutrients that are applied to a crop to achieve optimal yield
and quality. The following slides describe the value and characteristics of fertilizers in
modern food production.
The document summarizes key trends in fertilizer use in India based on a presentation by Vijay Paul Sharma. It notes that while fertilizer consumption and production in India has increased significantly since the 1960s, India still has relatively low fertilizer usage compared to other countries. There is also a rising dependence on fertilizer imports and declining self-sufficiency. The pricing and subsidy environment for fertilizers in India has evolved over time from full control to partial decontrol. However, major concerns remain such as imbalanced nutrient usage due to decontrol of P&K prices, rising subsidy bills, and potential impacts of subsidy withdrawal on small farmers. The way forward involves addressing these issues through consistent long-term policy and better targeting of
This document discusses the outlook and way forward for castor seeds and oil. It provides historical price data for various vegetable oils from 2011-2017 which shows castor oil prices increased by over 50% from 2016-2017. The document then analyzes supply and demand fundamentals for castor, including consumption trends, arrivals and disappearance data, and factors impacting yields. It identifies opportunities to improve yields through better farming practices and sets targets to increase average yields by 170% in the short term and 227% in the long term in order to meet growing demand and reduce costs. The document concludes by thanking the reader.
World Agricultural Outlook Board Interagency Commodity Estimates Committee Fo...MedfordCooperative
- World wheat production is forecast to decrease 1% to 718.9 million tons in 2015/16 due to expected declines in production in countries like Russia, Ukraine, and the European Union.
- U.S. wheat production is forecast to increase 3.1% to 56.8 million tons while wheat production is most other major producing countries is expected to decline.
- Global soybean production is forecast to remain unchanged at 317.3 million tons in 2015/16, with a 3% decline in U.S. production expected but higher production forecast in Brazil and India.
Egypt Gas Markets, 2011SummaryThis profile is the essential source for top-level energy industry data and information. The report provides an overview of each of the key sub-segments of the energy industry in Egypt. It details the market structure, regulatory environment, infrastructure and provides historical and forecasted statistics relating to the supply/demand balance for each of the key sub-segments. It also provides information relating to the natural gas assets (gas fields, pipelines and LNG terminals) in Egypt. The report compares the investment environment in Egypt with other countries in the region. The profiles of the major companies operating in the natural gas sector in Egypt together with the latest news and deals are also included in the report.Scope- Historic and forecast data relating to production, consumption, imports, exports and reserves are provided for each industry sub-segment for the period 2000-2020.- Historical and forecast data and information for all the major gas fields, (Liquified Natural Gas) LNG Terminals and pipelines in Egypt for the period 2000-2015.- Operator and equity details for major natural gas assets in Egypt.- Key information relating to market regulations, key energy assets and the key companies operating in the Egypt's energy industry.- Information on the top companies in the Egypt including business description, strategic analysis, and financial information.- Product and brand updates, strategy changes, R&D projects, corporate expansions and contractions and regulatory changes.- Key mergers and acquisitions, partnerships, private equity and venture capital investments, and IPOs.Reasons to buy- Gain a strong understanding of the country's energy market. - Facilitate market analysis and forecasting of future industry trends.- Facilitate decision making on the basis of strong historic and forecast production, reserves and capacity data. - Assess your competitor's major natural gas assets and their performance.- Analyze the latest news and financial deals in the gas sector of each country.- Develop strategies based on the latest operational, financial, and regulatory events. - Do deals with an understanding of how competitors are financed, and the mergers and partnerships that have shaped the market.- Identify and analyze the strengths and weaknesses of the leading companies in the country.
- Global dairy market prices have bottomed out and are expected to recover in the coming months driven by lower production in the EU and NZ and increased Chinese demand.
- EU, NZ, and US milk production is moderating due to lower profitability while Chinese imports are rising.
- Dairy prices on the GDT and in the EU have increased slightly in recent auctions reflecting tighter supply and demand fundamentals.
- Irish and global milk prices remain weak but further price reductions are unlikely as market sentiment improves.
This document summarizes key points from a presentation on doubling farmers' income in India. It notes that the government set up a committee in 2016 to develop a plan to double farmers' income by 2022. The committee report recommends increasing investment in agriculture by Rs. 640,000 crores, with 80% of funds coming from the government. It also suggests increasing the share of farm income from 60% to 69% by improving productivity, reducing costs and wastage, and facilitating diversification. However, the document questions some inconsistencies and whether resources can be mobilized given other spending priorities. It analyzes growth trends and argues for market reforms to truly incentivize farmers.
Vijay Paul Sharma, a professor at the Indian Institute of Management Ahmedabad, presented on the key issues around India's fertilizer subsidy program. He discussed trends showing rising fertilizer consumption but stagnant production, leading to increasing imports. While subsidies are meant to benefit farmers, analysis shows large fertilizer companies and large/commercial farms benefit more. Small and marginal farmers do see income gains from subsidies but imbalanced nutrient use is a problem. The large and growing cost of subsidies also presents a fiscal challenge for the government. Sharma concludes by arguing for rational pricing, balanced nutrient use through extension services, increasing domestic production capacity, and better targeting of subsidies.
Yara Fertilizer Industry Handbook
This handbook describes the fertilizer industry and in particular the nitrogen part which is
the most relevant for Yara International.
The document does not describe Yara or its strategies. For information on Yara-specific
issues please see the Capital Markets Day presentations.
Fertilizers are essential plant nutrients that are applied to a crop to achieve optimal yield
and quality. The following slides describe the value and characteristics of fertilizers in
modern food production.
The document summarizes key trends in fertilizer use in India based on a presentation by Vijay Paul Sharma. It notes that while fertilizer consumption and production in India has increased significantly since the 1960s, India still has relatively low fertilizer usage compared to other countries. There is also a rising dependence on fertilizer imports and declining self-sufficiency. The pricing and subsidy environment for fertilizers in India has evolved over time from full control to partial decontrol. However, major concerns remain such as imbalanced nutrient usage due to decontrol of P&K prices, rising subsidy bills, and potential impacts of subsidy withdrawal on small farmers. The way forward involves addressing these issues through consistent long-term policy and better targeting of
This document discusses the outlook and way forward for castor seeds and oil. It provides historical price data for various vegetable oils from 2011-2017 which shows castor oil prices increased by over 50% from 2016-2017. The document then analyzes supply and demand fundamentals for castor, including consumption trends, arrivals and disappearance data, and factors impacting yields. It identifies opportunities to improve yields through better farming practices and sets targets to increase average yields by 170% in the short term and 227% in the long term in order to meet growing demand and reduce costs. The document concludes by thanking the reader.
World Agricultural Outlook Board Interagency Commodity Estimates Committee Fo...MedfordCooperative
- World wheat production is forecast to decrease 1% to 718.9 million tons in 2015/16 due to expected declines in production in countries like Russia, Ukraine, and the European Union.
- U.S. wheat production is forecast to increase 3.1% to 56.8 million tons while wheat production is most other major producing countries is expected to decline.
- Global soybean production is forecast to remain unchanged at 317.3 million tons in 2015/16, with a 3% decline in U.S. production expected but higher production forecast in Brazil and India.
Egypt Gas Markets, 2011SummaryThis profile is the essential source for top-level energy industry data and information. The report provides an overview of each of the key sub-segments of the energy industry in Egypt. It details the market structure, regulatory environment, infrastructure and provides historical and forecasted statistics relating to the supply/demand balance for each of the key sub-segments. It also provides information relating to the natural gas assets (gas fields, pipelines and LNG terminals) in Egypt. The report compares the investment environment in Egypt with other countries in the region. The profiles of the major companies operating in the natural gas sector in Egypt together with the latest news and deals are also included in the report.Scope- Historic and forecast data relating to production, consumption, imports, exports and reserves are provided for each industry sub-segment for the period 2000-2020.- Historical and forecast data and information for all the major gas fields, (Liquified Natural Gas) LNG Terminals and pipelines in Egypt for the period 2000-2015.- Operator and equity details for major natural gas assets in Egypt.- Key information relating to market regulations, key energy assets and the key companies operating in the Egypt's energy industry.- Information on the top companies in the Egypt including business description, strategic analysis, and financial information.- Product and brand updates, strategy changes, R&D projects, corporate expansions and contractions and regulatory changes.- Key mergers and acquisitions, partnerships, private equity and venture capital investments, and IPOs.Reasons to buy- Gain a strong understanding of the country's energy market. - Facilitate market analysis and forecasting of future industry trends.- Facilitate decision making on the basis of strong historic and forecast production, reserves and capacity data. - Assess your competitor's major natural gas assets and their performance.- Analyze the latest news and financial deals in the gas sector of each country.- Develop strategies based on the latest operational, financial, and regulatory events. - Do deals with an understanding of how competitors are financed, and the mergers and partnerships that have shaped the market.- Identify and analyze the strengths and weaknesses of the leading companies in the country.
- Global dairy market prices have bottomed out and are expected to recover in the coming months driven by lower production in the EU and NZ and increased Chinese demand.
- EU, NZ, and US milk production is moderating due to lower profitability while Chinese imports are rising.
- Dairy prices on the GDT and in the EU have increased slightly in recent auctions reflecting tighter supply and demand fundamentals.
- Irish and global milk prices remain weak but further price reductions are unlikely as market sentiment improves.
The document summarizes Pakistan's fertilizer sector, including its structure, performance, and issues. It notes that the sector is highly regulated, production capacity is 10 million tons annually, and urea accounts for 66.7% of production. Key issues include gas shortages reducing plant utilization to 35%, restrictive regulations creating oligopolies, and an imbalanced use of nutrients promoted through nitrogen subsidies. Recommendations include reforming regulations, improving fertilizer use efficiency, and developing responsive crop varieties and computer models to optimize fertilizer application.
ANALYSIS OF PAKISTAN'S HORTICULTURE EXPORTSAkram Khalid
- Pakistan's horticulture exports have potential for growth given the global market for fruit and vegetable exports was over $222 billion in 2013. However, Pakistan only accounted for 0.3% of this market.
- The top horticultural crops in Pakistan are citrus and mango, which make up over 50% of total fruit production. For vegetables, potatoes and onions are the largest.
- Pakistan's citrus exports, led by kinnow, have been growing. However, export prices to countries like Afghanistan, Russia, and Ukraine are still below world prices, representing an opportunity.
- The FPCCI standing committee on horticulture aims to boost exports by identifying opportunities, addressing issues with min
1) The document summarizes the castor industry in China in 2017. Castor seed sowing area and production were at their lowest levels in recent years at 17.5KHA and 35KT respectively due to incompatible issues. However, the area is expected to rise to 60KHA in 2018 with government support.
2) China imported 267KT of castor oil in 2017, a 4% increase over 2016. Imports are expected to rise further to 280KT in 2018 to meet growing demand. Hengshui Jinghua Chemical was the largest importer at 79.6KT in 2017.
3) Sebacic acid production in China was 85KT in 2017, with Hengshui J
Global LNG dynamics are changing as new suppliers, markets, and flexibility emerge. While new supply projects will take longer than expected to come online, LNG demand from Asia is projected to continue strong growth. This will tighten the LNG market in the near-term before additional supply comes online later this decade. For Europe, LNG imports may decrease in the short-run as the market tightens but are expected to increase again by 2021 as new global supply comes available, with US exports potentially helping to supply Europe as a balancing market.
India is the world’s 5th largest importer of oil in 2010, importing ~75% of its oil needs. At US$ 103/bbl, India’s oil import bill would increase by US$ 20 bn in 2012. For India to Secure Oil for Sustaining Growth the options are 1. Domestic Exploration Efforts need to be Stepped Up. 2. Overseas Oil Equity: Natural Hedge against Increasing Prices. 3. Demand Management required to reduce Oil Intensity.
SQM reported its third quarter 2017 results. The company saw higher revenues and gross profits compared to the third quarter of 2016, driven by increased volumes in iodine and industrial chemicals offsetting lower prices. Prices increased in lithium and potassium business lines. SQM expects continued demand growth for its lithium and specialty plant nutrients products. The company has several expansion projects planned between 2016-2022 to increase production capacities of various products, with over $1 billion in planned capital expenditures.
The document summarizes trends in key agriculture and rural development indicators in COMESA from 1990-2010. Productivity of crops like maize, wheat and rice has increased only modestly, with annual growth rates below 1%. Agricultural labor productivity in COMESA has also seen minimal improvement, averaging just 0.1% growth per year. Livestock productivity is also low, with beef yields 153kg/animal versus the global average of 206kg. Wide yield gaps exist between countries and regions within COMESA. Low usage of inputs like fertilizers contributes to low productivity. There is high variability in crop yields due to dependence on rain-fed agriculture and weather. The number of undernourished people in COMESA has
SQM reported its 2017 results. Key highlights included:
- Revenue of $2.2 billion and EBITDA of $894 million.
- Lithium sales volumes of 49.7k MT and revenues of $645 million, contributing 60% of gross profit.
- Iodine sales volumes of 12.7k MT and revenues of $252 million, contributing 7% of gross profit.
- Potassium nitrate sales volumes of 966.2k MT and revenues of $697 million, contributing 19% of gross profit.
- Planned expansions of lithium carbonate and hydroxide capacities in Chile by 2019.
- Capital expenditures framework of $517 million for 2018
This document summarizes the global and Indian economic outlook and castor oil market trends. It provides an overview of steady global growth and India remaining a bright spot. For castor, it notes that sowing areas have declined in the past two years due to lower prices. It estimates the 2017-18 castor crop at 1.35 million metric tons and forecasts tight supply leading to higher prices to meet rising export demand of 650,000 tons. Two castor oil balance sheets are presented, with the document concluding that government crop estimates appear more accurate than other sources.
SQM reported its 2017 results. Key highlights included:
- Revenue of $2.2 billion and EBITDA of $894 million.
- Lithium sales volumes of 49.7k MT and revenues of $645 million, contributing 60% of gross profit.
- Iodine sales volumes of 12.7k MT and revenues of $252 million, contributing 7% of gross profit.
- Potassium nitrate sales volumes of 966.2k MT and revenues of $697 million, contributing 19% of gross profit.
- Planned expansions of lithium carbonate and hydroxide capacities in Chile by 2019.
- Capital expenditures framework of $517 million for 2018
Amara Raja Batteries Q2FY15: Buy for a target of Rs790IndiaNotes.com
Nalco reported strong results for the second quarter of fiscal year 2015. Net sales grew 15% year-over-year to INR 20 billion, 4% ahead of estimates, driven by higher metal and alumina realization and increased metal sales volumes. Profit after tax grew 91% year-over-year to INR 3.4 billion, 5% above estimates. Earnings were boosted by rising sales and stable production costs. The broker maintains a "Buy" rating for Nalco, seeing continued growth momentum and attractive valuations.
NMDC reported a 77% increase in net revenue for 2QFY2011 driven by higher iron ore realizations, though sales volumes declined. While average blended realizations grew 101.5% year-over-year, production and sales volumes both fell. However, EBITDA margins expanded 170 basis points to 74.8% due to higher prices, driving an 78.8% rise in net profit. Going forward, the company plans capacity expansion projects to increase production to 50 million tonnes by FY2014-15. However, near-term volume growth faces risks from the Karnataka mining ban and Naxal activities. The analyst maintains a Reduce rating with a target price of Rs. 244 based on a 7
Mission: We create a better understanding of the dairy world by providing comparable data, knowledge and inspiration.
The network approach – consisting of three pillars - the network of researcher - the network of companies/institutions and - the IFCN center with > 15 dairy economists.
"Sustaining CAADP Momentum: Growth and Investment Analysis" presented by Godfrey Bahiigwa at 10th CAADP PP Meeting Durban, South Africa March 19-21, 2014
Nishit Patel is seeking assignments in mechanical maintenance and condition monitoring with over 7 years of experience. He currently works as a Senior Condition Monitoring Technician for SATORP in Saudi Arabia through KBR-AY, where he performs vibration monitoring, online monitoring, lube oil analysis, and generates various maintenance reports. Previously, he worked for IOCL Gujarat Refinery through SKF India Ltd. He is proficient in vibration analysis instruments and software like SKF @ptitude analyst, AMS Suite, and reciprocating compressor monitoring tools. Nishit holds a Diploma in Mechanical Engineering and is skilled in English, Hindi, Gujarati, and computer applications like MS Office and AutoCAD.
This document is a curriculum vitae for Selvan K Kaliappan, an Indian national seeking work. He has over 7 years of experience in condition monitoring and maintenance roles in the oil, gas, and petrochemical industries in India and Saudi Arabia. He holds a Diploma in Mechanical Engineering and is proficient in English, Hindi, and Tamil. His experience includes vibration analysis, machinery maintenance and repair, pump operation, and ensuring equipment is functioning properly according to standard procedures.
This document is a resume for Romel P. Mendoza. It summarizes his career objective, professional profile, work history, academic qualifications, and skills. Mendoza has over 15 years of experience in engineering, sales, and service roles in industries including marine, automation, and sugar manufacturing. He holds a Bachelor's degree in Electronics and Communication Engineering and is licensed in the Philippines. His most recent role is as a Sales Engineer for Daikai Engineering in Singapore, where he sells and services marine diesel engines.
Mohamad Rizal Misbah is a 42-year-old Malaysian man seeking a job as a chief mechanic with over 25 years of experience in maintenance, fabrication, and operations across various roles in the oil and gas industry. He has a diploma in mechanical and plumbing and certificates in welding and fabrication. His most recent role was as chief mechanic at UMW Oil and Gas, where he oversaw maintenance operations and ensured equipment was running properly. He is proficient in English and the Malay language.
CV as Maintenance Technician (Armando Malasan)Armando Malasan
Armando Malasan is a Filipino automotive mechanic seeking a position in automotive maintenance. He has over 15 years of experience in automotive repair with Toyota dealerships and independent shops in the Philippines and South Sudan. Malasan's experience includes diagnosing and repairing engines, transmissions, AC systems and electrical components. He is proficient in computer-based vehicle diagnostics and has strong communication and customer service skills.
This resume is for a Pakistani national seeking the position of Chief Mechanic. The applicant has over 21 years of experience working in the oil industry, having held roles of increasing responsibility with NDC including Motorman, Assistant Mechanic, Senior Mechanic, and Chief Mechanic. He is currently working as Chief Mechanic for Dalma Energy & Co. LLC in Oman and has extensive experience working with offshore rigs and equipment. The applicant aims to utilize his communication skills and knowledge of HSE standards to safely maintain productivity in the role.
1. Sihabudheen is an Indian structural and architectural draughtsman with over 8 years of experience in the UAE, currently seeking a position as a structural or architectural draughtsman.
2. He has a diploma in draughtsmanship and computer skills including AutoCAD.
3. His most recent role was as a senior architectural draughtsman for Al Fara'a General Contracting Company working on the Al Hilal Bank Tower project in Abu Dhabi.
The document summarizes Pakistan's fertilizer sector, including its structure, performance, and issues. It notes that the sector is highly regulated, production capacity is 10 million tons annually, and urea accounts for 66.7% of production. Key issues include gas shortages reducing plant utilization to 35%, restrictive regulations creating oligopolies, and an imbalanced use of nutrients promoted through nitrogen subsidies. Recommendations include reforming regulations, improving fertilizer use efficiency, and developing responsive crop varieties and computer models to optimize fertilizer application.
ANALYSIS OF PAKISTAN'S HORTICULTURE EXPORTSAkram Khalid
- Pakistan's horticulture exports have potential for growth given the global market for fruit and vegetable exports was over $222 billion in 2013. However, Pakistan only accounted for 0.3% of this market.
- The top horticultural crops in Pakistan are citrus and mango, which make up over 50% of total fruit production. For vegetables, potatoes and onions are the largest.
- Pakistan's citrus exports, led by kinnow, have been growing. However, export prices to countries like Afghanistan, Russia, and Ukraine are still below world prices, representing an opportunity.
- The FPCCI standing committee on horticulture aims to boost exports by identifying opportunities, addressing issues with min
1) The document summarizes the castor industry in China in 2017. Castor seed sowing area and production were at their lowest levels in recent years at 17.5KHA and 35KT respectively due to incompatible issues. However, the area is expected to rise to 60KHA in 2018 with government support.
2) China imported 267KT of castor oil in 2017, a 4% increase over 2016. Imports are expected to rise further to 280KT in 2018 to meet growing demand. Hengshui Jinghua Chemical was the largest importer at 79.6KT in 2017.
3) Sebacic acid production in China was 85KT in 2017, with Hengshui J
Global LNG dynamics are changing as new suppliers, markets, and flexibility emerge. While new supply projects will take longer than expected to come online, LNG demand from Asia is projected to continue strong growth. This will tighten the LNG market in the near-term before additional supply comes online later this decade. For Europe, LNG imports may decrease in the short-run as the market tightens but are expected to increase again by 2021 as new global supply comes available, with US exports potentially helping to supply Europe as a balancing market.
India is the world’s 5th largest importer of oil in 2010, importing ~75% of its oil needs. At US$ 103/bbl, India’s oil import bill would increase by US$ 20 bn in 2012. For India to Secure Oil for Sustaining Growth the options are 1. Domestic Exploration Efforts need to be Stepped Up. 2. Overseas Oil Equity: Natural Hedge against Increasing Prices. 3. Demand Management required to reduce Oil Intensity.
SQM reported its third quarter 2017 results. The company saw higher revenues and gross profits compared to the third quarter of 2016, driven by increased volumes in iodine and industrial chemicals offsetting lower prices. Prices increased in lithium and potassium business lines. SQM expects continued demand growth for its lithium and specialty plant nutrients products. The company has several expansion projects planned between 2016-2022 to increase production capacities of various products, with over $1 billion in planned capital expenditures.
The document summarizes trends in key agriculture and rural development indicators in COMESA from 1990-2010. Productivity of crops like maize, wheat and rice has increased only modestly, with annual growth rates below 1%. Agricultural labor productivity in COMESA has also seen minimal improvement, averaging just 0.1% growth per year. Livestock productivity is also low, with beef yields 153kg/animal versus the global average of 206kg. Wide yield gaps exist between countries and regions within COMESA. Low usage of inputs like fertilizers contributes to low productivity. There is high variability in crop yields due to dependence on rain-fed agriculture and weather. The number of undernourished people in COMESA has
SQM reported its 2017 results. Key highlights included:
- Revenue of $2.2 billion and EBITDA of $894 million.
- Lithium sales volumes of 49.7k MT and revenues of $645 million, contributing 60% of gross profit.
- Iodine sales volumes of 12.7k MT and revenues of $252 million, contributing 7% of gross profit.
- Potassium nitrate sales volumes of 966.2k MT and revenues of $697 million, contributing 19% of gross profit.
- Planned expansions of lithium carbonate and hydroxide capacities in Chile by 2019.
- Capital expenditures framework of $517 million for 2018
This document summarizes the global and Indian economic outlook and castor oil market trends. It provides an overview of steady global growth and India remaining a bright spot. For castor, it notes that sowing areas have declined in the past two years due to lower prices. It estimates the 2017-18 castor crop at 1.35 million metric tons and forecasts tight supply leading to higher prices to meet rising export demand of 650,000 tons. Two castor oil balance sheets are presented, with the document concluding that government crop estimates appear more accurate than other sources.
SQM reported its 2017 results. Key highlights included:
- Revenue of $2.2 billion and EBITDA of $894 million.
- Lithium sales volumes of 49.7k MT and revenues of $645 million, contributing 60% of gross profit.
- Iodine sales volumes of 12.7k MT and revenues of $252 million, contributing 7% of gross profit.
- Potassium nitrate sales volumes of 966.2k MT and revenues of $697 million, contributing 19% of gross profit.
- Planned expansions of lithium carbonate and hydroxide capacities in Chile by 2019.
- Capital expenditures framework of $517 million for 2018
Amara Raja Batteries Q2FY15: Buy for a target of Rs790IndiaNotes.com
Nalco reported strong results for the second quarter of fiscal year 2015. Net sales grew 15% year-over-year to INR 20 billion, 4% ahead of estimates, driven by higher metal and alumina realization and increased metal sales volumes. Profit after tax grew 91% year-over-year to INR 3.4 billion, 5% above estimates. Earnings were boosted by rising sales and stable production costs. The broker maintains a "Buy" rating for Nalco, seeing continued growth momentum and attractive valuations.
NMDC reported a 77% increase in net revenue for 2QFY2011 driven by higher iron ore realizations, though sales volumes declined. While average blended realizations grew 101.5% year-over-year, production and sales volumes both fell. However, EBITDA margins expanded 170 basis points to 74.8% due to higher prices, driving an 78.8% rise in net profit. Going forward, the company plans capacity expansion projects to increase production to 50 million tonnes by FY2014-15. However, near-term volume growth faces risks from the Karnataka mining ban and Naxal activities. The analyst maintains a Reduce rating with a target price of Rs. 244 based on a 7
Mission: We create a better understanding of the dairy world by providing comparable data, knowledge and inspiration.
The network approach – consisting of three pillars - the network of researcher - the network of companies/institutions and - the IFCN center with > 15 dairy economists.
"Sustaining CAADP Momentum: Growth and Investment Analysis" presented by Godfrey Bahiigwa at 10th CAADP PP Meeting Durban, South Africa March 19-21, 2014
Nishit Patel is seeking assignments in mechanical maintenance and condition monitoring with over 7 years of experience. He currently works as a Senior Condition Monitoring Technician for SATORP in Saudi Arabia through KBR-AY, where he performs vibration monitoring, online monitoring, lube oil analysis, and generates various maintenance reports. Previously, he worked for IOCL Gujarat Refinery through SKF India Ltd. He is proficient in vibration analysis instruments and software like SKF @ptitude analyst, AMS Suite, and reciprocating compressor monitoring tools. Nishit holds a Diploma in Mechanical Engineering and is skilled in English, Hindi, Gujarati, and computer applications like MS Office and AutoCAD.
This document is a curriculum vitae for Selvan K Kaliappan, an Indian national seeking work. He has over 7 years of experience in condition monitoring and maintenance roles in the oil, gas, and petrochemical industries in India and Saudi Arabia. He holds a Diploma in Mechanical Engineering and is proficient in English, Hindi, and Tamil. His experience includes vibration analysis, machinery maintenance and repair, pump operation, and ensuring equipment is functioning properly according to standard procedures.
This document is a resume for Romel P. Mendoza. It summarizes his career objective, professional profile, work history, academic qualifications, and skills. Mendoza has over 15 years of experience in engineering, sales, and service roles in industries including marine, automation, and sugar manufacturing. He holds a Bachelor's degree in Electronics and Communication Engineering and is licensed in the Philippines. His most recent role is as a Sales Engineer for Daikai Engineering in Singapore, where he sells and services marine diesel engines.
Mohamad Rizal Misbah is a 42-year-old Malaysian man seeking a job as a chief mechanic with over 25 years of experience in maintenance, fabrication, and operations across various roles in the oil and gas industry. He has a diploma in mechanical and plumbing and certificates in welding and fabrication. His most recent role was as chief mechanic at UMW Oil and Gas, where he oversaw maintenance operations and ensured equipment was running properly. He is proficient in English and the Malay language.
CV as Maintenance Technician (Armando Malasan)Armando Malasan
Armando Malasan is a Filipino automotive mechanic seeking a position in automotive maintenance. He has over 15 years of experience in automotive repair with Toyota dealerships and independent shops in the Philippines and South Sudan. Malasan's experience includes diagnosing and repairing engines, transmissions, AC systems and electrical components. He is proficient in computer-based vehicle diagnostics and has strong communication and customer service skills.
This resume is for a Pakistani national seeking the position of Chief Mechanic. The applicant has over 21 years of experience working in the oil industry, having held roles of increasing responsibility with NDC including Motorman, Assistant Mechanic, Senior Mechanic, and Chief Mechanic. He is currently working as Chief Mechanic for Dalma Energy & Co. LLC in Oman and has extensive experience working with offshore rigs and equipment. The applicant aims to utilize his communication skills and knowledge of HSE standards to safely maintain productivity in the role.
1. Sihabudheen is an Indian structural and architectural draughtsman with over 8 years of experience in the UAE, currently seeking a position as a structural or architectural draughtsman.
2. He has a diploma in draughtsmanship and computer skills including AutoCAD.
3. His most recent role was as a senior architectural draughtsman for Al Fara'a General Contracting Company working on the Al Hilal Bank Tower project in Abu Dhabi.
United Phosphorus reported 8.6% year-over-year sales growth to Rs. 1,257 crore for the second quarter of fiscal year 2011, which was below analyst estimates. EBITDA margin was 18.5%, in line with the previous year. PAT grew 13.4% to Rs. 131 crore. Revenue growth was impacted by unfavorable exchange rates and lower sales in North America and Europe due to adverse weather. The company maintained its full-year revenue growth guidance of 8-10% and EBITDA margin expansion target. Analysts maintained an 'Accumulate' rating with a target price of Rs. 228.
1. Fertilizer demand in India is increasing and is expected to grow from 206.5 million tonnes in 2007/08 to 241 million tonnes in 2011/12. However, production may not be able to meet this rising demand, leading to potential shortages.
2. The three major fertilizers used in India are urea, DAP, and MOP. Urea production has increased but still relies on imports. DAP and MOP demand is also growing faster than domestic supply.
3. To reduce future deficits, the government is encouraging expansion of existing fertilizer plants and development of new plants. However, challenges remain around adequate feedstock and financing. Accurate forecasting of demand
This presentation provides an overview of the chemicals industry in India. It notes that the Indian chemicals industry is the 12th largest globally and 3rd largest in Asia, with a size of US$76 billion in 2009-2010. It is expected to grow at 10%, double the global industry growth rate. The presentation discusses the key segments and sub-segments of the industry, including basic chemicals like petrochemicals and fertilizers, specialty chemicals, and knowledge chemicals like pharmaceuticals and biotechnology. It provides data on leading companies and production capacities for various chemicals. The government is promoting industry growth through initiatives like investment breaks for R&D and setting up of petroleum, chemicals and petrochemical investment regions.
ABUK Model Update Re-initiation of Coverage - October 2016 (2)Ali Afifi
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2) CNOOC Ltd remains the top pick but the target price is cut to reflect potential tax impacts. Sinopec is raised to a buy due to lower tax impact and better refining. PetroChina is cut to a hold as it may suffer most from the potential 2012 tax.
3) The potential resource tax change raises overhang for Chinese energy firms as it may standardize taxation based on value and volume across regions sooner than expected.
The document provides a financial and business performance summary for Engro Corporation and its subsidiaries for the first quarter of 2011. Key highlights include:
- Consolidated revenue increased 27% to Rs. 21.8 billion driven by growth across all business segments.
- Consolidated profit increased 9% to Rs. 2.05 billion, with gains in the fertilizer, foods, and power generation businesses offsetting losses in petrochemicals.
- Fertilizer revenue grew driven by higher urea prices due to gas curtailment, though production declined 10% due to gas issues. Profits grew 74% on price increases.
- Foods revenue and profits increased 36% and over 70
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- Cash flow was negative due to ongoing strategic investments and seasonal working capital needs.
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Ambuja Cements reported a 52.2% year-over-year decline in net profit for the third quarter of 2010 due to lower sales realizations and higher raw material and power costs. However, despatches increased 6.1% year-over-year. Going forward, analysts expect capacity additions to drive higher despatch growth and margins to improve as new clinker capacities eliminate external purchases. While third quarter results were below estimates, the stock is considered fairly priced at current levels based on estimated growth and margins over the next two years.
1. October 2011
Asad Siddiqui
asad@investcapital.com
9221-111 111 097 (ext 8636)
• EnVen production comes into picture
• Product price on the rise, margins getting strong
• Sector Outlook - Brighter ahead
• FFC - Royal flushing peers’ moves - Buy with total return expected
of 59% with Jun-12 TP of Rs251/share
• FFBL - The little ‘giant’ - ~33% return expected along with Jun-12
TP of Rs72/share
• ENGRO - The price king! - 90% return expected with Jun-12 TP of
Rs265/share
Fertilizer Sector Update
October 2011
FERTILIZER SECTOR CY11
A Publication of InvestCap Research
Pakistan Research
www.investcapital.com
Invest Capital Markets Limited
Urea turns into Gold!
Fertilizer Sec, Mkt. Cap. Rs258.42bn
Top Pick (s) FFC, ENGRO, FFBL
Sector Outlook Positive
Fertilizer Univ. PE (2011E) 6.26x
Fertilizer Univ. Div Yld (2011E) 10.8%
Fertilizer Univ. Ear Gro (2011E) 63.8%
Fertilizer Univ. Return in CY10 22.5%
2. Contents
Fertilizer Sector Update 3
Sector Outlook 8
Fauji Fertilizer Company Limited 10
Outlook & Recommendation 12
Financials Highlights 13
Key Ratios 14
Fauji Fertilizer Bin Qasim Limited 16
Outlook & Recommendation 17
Financials Highlights 18
Key Ratios 19
Engro Corporation Limited 21
Outlook & Recommendation 24
Financials Highlights 25
Key Ratios 26
Notes 27
Date of completion: October 05, 2011
Prices are as of October 04, 2011
October 2011
FERTILIZER SECTOR CY11
A Publication of InvestCap Research
Pakistan Research
5. 3InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
N P
NFC / PAK
ARAB, 65%
ENGRO,
22% FATIM A,
13%
C A N
NFC / PAK
ARAB, 49%
FATIM A,
51%
Fertilizer Sector
SSP
Suraj fert,
31%
AGRITECH
(PAFL),
31%
NFC -LCFL
(alhamd),
38%
N P K
ENGRO,
99%
IM PORTED,
1%
UR EA
DAWH, 5%
FATIM A,
8%
ENGRO,
22%
FFC, 51%
PAK
ARAB, 1%
AGRITECH,
2%
IMPORTED,
11%
D A P
IMPORTED,
32%
FFBL (FFC
SONA), 68%
Source: NFDC, InvestCap Research
6. 4InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
Fertilizer Sector Update
Pakistan being an agrarian economy stands with rigorous demand for
everything that ranges from tractors to seeds, from pesticides to fertilizers.
Historically, agriculture has contributed ~22% towards Pakistan's GDP, and
has helped in employing more than 45% of country's labor force directly and
indirectly. Moreover, country's agriculture sector has constantly helped in
providing different industries with raw materials (example textiles).
This gives fertilizer sector immense importance in Pakistan. Currently, country’s
fertilizer sector is equipped with total production capacity of 6.7mn tons of
Urea and 669k tons of Di Ammonium Phosphate (DAP). There are a total of 9
companies, each manufacturing different fertilizer products. As far as
capacity break-up goes, Engro Corp (ENGRO) is now the leading company,
equipped with 34% of the total country's Urea manufacturing capacity. Fauji
Fertilizer Company (FFC) is only second to ENGRO with 31% share of the Urea
installed capacity in the country. Fauji Fertilizer Bin Qasim Limited (FFBL) and
Dawood Hercules have a 10% share each. Fatima Fertilizers Limited (FATIMA)
and AgriTech (AGL) complete the list of Urea manufacturing companies,
having capacity share of 8% and 7% respectively. Meanwhile, FFBL is the sole
producer of DAP in the country.
EnVen production comes into picture
Keeping the country's ever-growing Urea demand in view, fertilizer
manufacturers have constantly increased product capacity during 2006 to
2011, growing at a CAGR of 7% till 2012, when ENGRO's new capacity is
34%
31%
10%
10%
8%
7%
ENGRO FFC FFBL DAWH FATIM A AGL
Industry capacity share
UREA, DAP - PRODUCTION SNAPSHOT
Production CY06A CY07A CY08A CY09A CY10A CAGR CY11E CY12F CY13F CAGR
Urea 4,804 4,755 4,978 5,046 5,151 2% 4,925 5,371 5,630 2%
Growth 2% -1% 5% 1% 2% - -4% 9% 5% -
Cap. Utilization 114% 110% 109% 107% 91% - 79% 80% 84% -
DAP 450 357 471 540 647 9% 650 657 663 1%
Growth 0% -21% 32% 15% 20% - 1% 1% 1% -
Cap. Utilization 101% 80% 70% 81% 97% - 97% 98% 99% -
Source: Company Reports, InvestCap Research
Fertilizer Sec, Mkt. Cap. Rs258.42bn
Top Pick (s) FFC, ENGRO, FFBL
Sector Outlook Positive
Fertilizer Univ. PE (2011E) 6.26x
Fertilizer Univ. Div Yld (2011E) 10.8%
Fertilizer Univ. Ear Gro (2011E) 63.8%
Fertilizer Univ. Return in CY10 22.5%
Source: NFDC, InvestCap Research
Source: KSE, InvestCap Research
60%
80%
100%
120%
140%
160%
180%
200%
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Fetilizer Sector
KSE-100
7. 5InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
expected to be in full swing. However, urea production has failed to take off
in similar fashion as compared to the capacity, and is expected to grow by a
mere 0.4% by the end of CY11. However, we do expect production to increase
going forward owing to better and continuous supply of gas. We estimate
urea production to increase by an average ~9% in CY12 and by 5% in CY13.
Following the Urea trend, FFBL also escalated the capacity of it's DAP
manufacturing unit over the period of time, where it grew by a 6-year CAGR
of 7% (CY06-CY11). Going forward, we also expect DAP production to
continue grow at a similar rate i.e. 7%. Unlike Urea, DAP is less dependent on
gas, hence its production remains much more efficient as compared to Urea’s.
Increasing demand to make more room for imports
During the past 5 years, Urea offtake in the country has increased at a CAGR
of only 3.2%. For CY11, we expect countrywide Urea offtake to clock in at
6.23mn tons (up 1% YoY), 80% of which is expected to be produced locally.
Going forward, we expect Urea offtake to grow at 2% for CY12, and 2.5% for
CY13. DAP offtake, on the other hand, has experienced a minor contraction
of 2.2% (5-year CAGR). For CY11, we expect DAP offtake to appreciate by a
decent 12% YoY on the back of low base-effect (DAP offtake was low during
CY10 due to massive flood facing the country). We expect DAP offtake to
grow by 5% and 3% in CY12 and CY13 respectively.
Low gas availability => lower production => Higher price
Fertilizer sector is equipped with an enviable pricing power and this is what
makes the sector highly attractive for making investments. For instance,
during CY11YTD, average Urea prices have gone up by a massive ~60% YoY.
The main reason behind price increase by such massive rate is the acute
supply shortage of gas (basic raw material). While the menace of gas
curtailment continues to sting and hamper country’s economic activity,
fertilizer manufactures are forced to increase their prices in order to curtail
0
1000
2000
3000
4000
2006
2007
2008
2009
2010
2011YTD
DAP Urea
Local urea DAP historical prices(P KR / bag)
UREA, DAP - OFFTAKE SNAPSHOT
Offtake CY06A CY07A CY08A CY09A CY10A CAGR CY11E CY12F CY13F CAGR
UREA 5,235 4,917 5,532 6,478 6,123 4% 6,246 6,371 6,530 2%
Growth 2% -6% 13% 17% -5% - 1% 2% 2% -
Local Portion 90% 95% 92% 78% 84% -2% 80% 81% 83% 0%
DAP 1,508 1,390 775 1,691 1,322 -3% 1,483 1,557 1,612 7%
Growth 0% -8% -44% 118% -22% - 12% 5% 3% -
Local Portion 31% 25% 40% 42% 50% 12% 45% 42% 41% -6%
Source: Company Reports, InvestCap Research
Source: NFDC, InvestCap Research
8. 6InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
their losses. This increase in price on an already low production is proving to
be tough on the farmer. However, this price increase has also aided the
gov’t in a way, as now it has to provide lower subsidy on imported Urea. We
expect Urea imports to be around 1.25mn tons in CY11, and as per our
calculations, every Rs50/bag increase in product price brings gov't subsidy
down by a massive Rs1.25bn. However, we expect the total subsidy on
imported Urea to stand around Rs21.5bn for CY11.
As for DAP, rising price of Phos-acid is forcing FFBL to raise prices so that the
company can maintain its already high margins.
International and local prices converging
If we look at the graph, we see both local and international prices of Urea
move in the same direction. However, YTDCY11 Urea prices have
experienced expansion albeit with a smaller gap between local and int’l
prices. Therefore, any hike in the int’l prices of urea can provide local
manufacturers with further room to increase their prices in the future. At
current levels, Urea’s global price is hovering at a premium of ~46%.
Urea prices rise sharply than input prices
Ever since gas curtailment came into the picture, Urea manufactures were
forced to increase prices by a higher magnitude. As the graph below reveals,
during YTDCY11, Urea price has gone up by more than 40% whereas cost of
the input (gas) has gone up by a mere 3%, suggesting that it has been gas
curtailment instead of any increase in the per mmbtu cost of gas that left
Urea manufacturers with no other option but to increase product price to
maintain their margins.
-
100
200
300
400
500
2006
2007
2008
2009
2010
2011YTD
Local Urea Imported Urea
Avg annual int'l and local urea prices(USD / to n)
-20%
0%
20%
40%
60%
80%
2006 2007 2008 2009 2010 2011YTD
Cumilativ e gas price
increase
Urea price increase
(% change)
Urea price and gas price
Source: Bloomberg, InvestCap Research
Source: Bloomberg, InvestCap Research
9. 7InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
DAP prices on the march
DAP prices, on the other hand, have escalated at a 24% CAGR (as the graph
reveals), where much of the increase was witnessed post 4MCY11 and
imposition of Sales Tax on fertilizers. However, during the same period DAP’s
primery raw material (Phos-acid)’s prices escalated at 13% CAGR with import
price of DAP increasing by the same quantum. Keeping up with current trend,
we expect Phos-acid prices to rise in the coming quarter, and expect it to
hover around USD1,120/ton, thus we expect local prices of DAP to rise as
well. As far as international prices are concerned, new supply from Ma'aden
is expected to bring the prices of DAP down in the international market.
Rain cum flood impact not significant
The following graph shows provincewise Urea and DAP offtake numbers. The
figure shows the province of Punjab enjoys the lion's share in both Urea and
DAP offtake, keeping in view this trend, we do not expect rain-cum-flood
situation in Sindh to hurt the cumulative offtake of fertilizer in the country,
and expect the offtake levels to stay closer to their annual averages.
0
200
400
600
800
1000
1200
1400
CY06A
CY07A
CY08A
CY09A
CY10A
YTDCY11A
Local DAP International DAP
Phos-acid
Avg annual int'l, local DAP and Phos-acid
prices(USD/ton)
0%
20%
40%
60%
80%
100%
2006A
2007A
2008A
2009A
2010A
7MCY11
2006A
2007A
2008A
2009A
2010A
7MCY11
Punjab Sindh KP Balouchistan
Province wise DAP and urea offtake
DAP Urea
Source: NFDC, InvestCap Research
Source: Bloomberg, InvestCap Research
10. 8InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
Sector Outlook - Brighter ahead
Additional gas flows form Qadirpur field and Kunal Pasaki, are expected to
add ~200mmcfd to the sui network grid, which going forward should improve
the supply situation to the fertilizer plants on Sui Network, enabling them with
better flow of gas. However, this is a short term measure, in the long term,
unless any sizable discovery is made gas, outages are expected to occur
regularly with increasing durations. Thus, in the long run fertilizer price rise is
highly likely. Being an agrarian economy we expect demand for Urea to be
ever present.
Regional Attractiveness
Not only on the local front, Pakistan fertilizers stand highly attractive in a
regional contest as well. Following graphs show key ratios and profitability
growth measures on which Pakistan fertilizers (mainly FFC, FFBL and ENGRO)
stand out. The three major companies show higher Earnings Growth, Dividend
Yields and Return on Earnings with lower Price to Earnings, as depicted by the
following charts.
Regional ROE
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FFCPA
FFBLPA
ANHUICH
YIWUCH
RESPIN
RALIIN
SHINDOOCH
ENGROPA
GSFCIN
TPBTB
Regional Earning Growth
0%
2%
4%
6%
8%
10%
12%
14%
TPBTB
FFBLPA
ENGROPA
FFCPA
GSFCIN
SHINDOOCH
YIWUCH
ANHUICH
RALIIN
RESPIN
Regional PE
-
5
10
15
20
25
30
35
RESPIN
RALIIN
ANHUICH
YIWUCH
SHINDOOCH
GSFCIN
FFCPA
ENGROPA
FFBLPA
TPBTB
Regional Dividend Yield
0%
2%
4%
6%
8%
10%
12%
14%
16%
FFBLPA
FFCPA
TPBTB
ENGROPA
GSFCIN
RALIIN
SHINDOOCH
RESPIN
ANHUICH
YIWUCH
Source: Bloomberg, InvestCap Research
12. 10InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
FFC - Royal flushing peers’ moves
Rising Urea prices proved to be most fruitful for FFC, as the company receives
its gas supply from the Mari network. During 1HCY11, company’s topline grew
by a decent 21% YoY on the back of ~37% YoY increase in the price of Urea.
However, had production levels not fallen by 5% YoY during the said period,
topline could have witnessed further growth. Gross margins experienced a
colossal growth of 12.3pps, owning to above-mentioned price increase
coupled with decrease in the cost of production (amid gas curtailment),
while the input charges per unit remained the same. Distribution charges
also rose by 16% YoY mainly due to the rise in the price of diesel (up 20% YoY).
Increase of 89% YoY in other income (higher dividends from FFBL) contributed
heavily in bolstering the bottomline (35% EPS contribution). This increase at
such massive level aided in offsetting 78% YoY increase in other charges of
the company, leading to a bottomline growth of 61% YoY.
FFBL's dividends to keep providing support
FFC has ~51% stake in FFBL, which entitles FFC to enjoy 51% of all the dividends
that FFBL declares (FFBL’s dividend contribution to FFC earnings has
substantially increased to 36% against 20% during CY05-10). During CY11,
FFBL’s contribution to FFC’s earnings is expected to increase to 40%, on the
back of massive increase of 50% in FFBL’s earnings this year. Thus, going forward,
FFC1HCY11 RESULT REVIEW
(Rs mn) 1HCY11 YoY 2QCY11 QoQ
Net Sales 24,221 21% 13,120 18%
Gross Profit 13,693 55% 7,783 32%
Gross Margin 56.5% 12.25pps 59.3% 6pps
Selling and Distribution Cost 2,165 16% 1,148 13%
Finance Cost 471 -5% 242 6%
Other Expenses 1,121 78% 615 21%
Other Income 2,882 89% 919 -53%
Profit after Tax 8,189 61% 4,080 -1%
EPS @ 848mn shares 9.65 4.81
DPS @ 848mn shares 9.25 4.75
Source: Company Reports, InvestCap Research
Company Discripation
Fauji Fertilizer Company Limited is the
largest urea producer in Pakistan; the
company also enjoys the biggest
market share of the urea market. FFC
was incorporated in 1978 as a
private limited company. This was a
joint venture between Fauji
Foundation (a leading charitable
trust in Pakistan) and Haldor Topsoe
A/S of Denmark. Today the company
has assest bass of ~Rs45bn, making it
one of the leading and most
profitable companies in Pakistan.
-
5.00
10.00
15.00
20.00
25.00
30.00
CY11F
CY12F
CY13F
CY14F
CY15F
0%
5%
10%
15%
20%
25%
30%
35%
FFC EPS
FFBL's contribution
Percentage participation by FFBL(EPS Rs)
FFBL EPS participation in FFC
Source: Company Reports, InvestCap Research
FFC Gross Margins
25%
30%
35%
40%
45%
50%
55%
60%
65%
CY05A
CY07A
CY09A
CY11E
CY13F
CY15F
Bloomberg Code FFC PK
No. of Shares 848.16mn
Avg Daily Vol (1-Yr) 1.86mn Sh
Last Closing Rs170.62
Target Price (Jun-11) Rs251.00
Upside Potential 47.10%
Dividend Yield (CY12) 15.35%
Total Return (CY12) 62.45%
Return in CY10 22.28%
Source: Company Reports, InvestCap Research
13. 11InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
Source: NFDC, InvestCap Research
FFC’S WIND POWER PROJECT
Project cost USD140mn
Capacity 50mw
Debt financing 70%
Equity financing 30%
Source: Company Reports
UREA PRICE SENSITIVITY WITH EPS
Price/bag (Rs) CY12F CY13F T. Price
Base-case 29.11 29.30 251
20 29.75 29.97 257
40 30.40 30.64 263
60 31.04 31.31 269
80 31.69 31.98 275
100 32.34 32.65 280
Source: Company Reports, InvestCap Research
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2009A
2010A
2011E
2012F
2013F
112%
114%
116%
118%
120%
122%
Urea Production
Urea Sales
Capacity Utilization
FFC production and sales
(000 tons)
stable income from FFBL is going to boost earnings of FFC, in addtion to core
income increase. Currently, FFBL's participation in FFC's EPS is expected to be
at ~40%, which is expected to stabilize at ~30% during CY12 and CY13.
FFC the biggest gainer of any urea price hike
FFC receives gas supply from Mari-gas fields; hence the company is not facing
as much of a dire situation on gas supply front as players on the SNGP network.
Therefore, any increase in the price of urea coming from ENGRO (over and
above our price assumption, which is same as for ENGRO) is going to be
beneficial for FFC. We have given below a sensitivity that showcases the
impact of Urea price change on expected earnings of FFC.
Company embarking on new ventures
FFC successfully had a financial close of its venture in the wind power project.
As per our discussion with the company’s management, the cost of the project
is expected to be around USD140mn, with debt to equity ratio being at
70:30. The project is expected to come online during early CY13.
This project is going to be beneficial for the company due to virtually non-
extent operating cost. Guarantee of the wind speed insured by the gov’t of
Sindh also makes this project an attractive investment for FFC. From a
valuation standpoint, keeping timeline of the project we have not yet
incorporated the earnings impact of this project, which would have only
made FFC’s already compelling valuations more attractive.
14. 12InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
Outlook and Recommendation
As discussed earlier, the company is not as much plagued as its peers on the
Sui network. Thus, as gas curtailment increases on other fertilizer players in
the sector i.e. Engro, it is going to benefit FFC in form of increased margins
with every increase in Urea price that Engro passes on to consumer in order
to make up for the production loss.
FFC is currently trading at forward PE of 5.86x and 5.8x for CY12 and CY13
respectively, coupled with CY12 and CY13 massive dividend yield of ~15.4%
15.6%. Like FFBL, the company’s main investing trigger is its handsome payout
(90% for CY11E,CY12F and CY13F). We have 'Buy' call on the scrip with Jun-12
Target Price of Rs251/share, which provide a solid 47% upside from current
levels.
FFC VALUATION BREAK UP
Rs mn CY11E CY12F CY13F CY14F CY15F Terminal
FCFE 23,060 26,510 23,302 22,823 23,997 144,732
Cost of equity 21% 21% 21% 21% 21% 21%
Discounted FCFE 26,489 24,433 19,384 17,746 17,741 107,001
Accumulated FCFE 212,795
Number of shares 848
FCFE per share 251
Source: Company Reports, InvestCap Research
VALUATION CRITERIA
Cost of Equity 21%
Risk Premium 6.5%
Terminal growth 3%
-1
49
99
149
199
249
299
Jan-
06
Sep-
06
May-
07
Jan-
08
Sep-
08
May-
09
Jan-
10
Sep-
10
May-
11
FFC PE Bands
3x
5x
8x
10x
15x
(Rs bn)
15. 13InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
FFC’S INCOME STATEMENTS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Sales 36,163 44,874 57,936 64,037 66,599
Cost of Sales 20,515 25,310 24,171 24,200 26,114
Gross Profit 15,648 19,564 33,766 39,838 40,485
Selling and Distribution 3,175 3,944 6,144 5,302 5,539
EBIT 12,474 15,619 27,622 34,536 34,945
Financial charges 945 1,087 1,106 1,117 754
Other income 2,801 3,153 5,247 5,625 5,344
Other charges 1,272 1,376 2,334 1,796 1,868
Net Profit before Tax 13,057 16,310 29,428 37,248 37,668
Tax 4,233 5,281 9,656 12,560 12,814
Profit after tax 8,824 11,029 19,772 24,689 24,853
EPS (Rs) @ 848mn shares 10.40 13.00 23.31 29.11 29.30
DPS (Rs) @ 848mn shares 13.15 16.00 20.98 26.20 26.37
FFC'S BALANCE SHEETS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Equity
Issued and Paidup 6,785 6,785 8,482 8,482 8,482
Share Capital 13,083 15,448 24,745 34,125 46,256
Liabilities
Long term Liabilities 7,615 7,035 7,857 6,155 4,697
Current Liabilities 17,855 20,578 23,922 26,993 27,258
Total Liabilities 25,469 27,613 31,221 33,148 31,955
Equity Liabilities 38,552 43,061 56,524 67,273 78,211
Assets
Current Assets 14,917 17,224 30,435 41,484 52,604
Fixed Assets 23,634 25,837 26,089 25,789 25,607
Total Assets 38,552 43,061 56,524 67,273 78,211
FFC'S CASH FLOWS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Cashflow from Operations 13,519 15,917 20,545 30,167 26,548
Cashflow from Investments (5,758) (8,657) 614 (878) (1,044)
Cashflow from Financing (4,842) (9,920) (10,561) (17,160) (14,924)
Net Inflow / Outflow 2,918 (2,660) 10,598 12,129 10,580
Source:Company Reports, InvestCap Research
Financial Highlights
16. 14InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
FFC’S KEY RATIOS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Liquidity ratios
Current Ratio 0.84 0.84 1.24 1.4 1.68
Quick Ratio 0.61 0.66 1.01 1.19 1.45
Captial structure
Times interest earned 14 15 25 27 41
Int bearing debt to equity 0.35 0.25 0.19 0.1 0.04
Total debt to equit 1.95 1.79 1.3 1.05 0.79
Returns ratios
Return on assets (RoA) 23% 26% 34% 34% 31%
Return on Equity (RoE) 67% 71% 79% 71% 56%
Return on Cap. employed 55% 62% 95% 101% 103%
Profitablity margins
Gross margin 43% 44% 57% 58% 57%
EBITDA Margin 37% 37% 45% 56% 54%
Net profit margins 24% 25% 34% 35% 34%
Growth
Sales 18% 24% 25% 6% 4%
EBITDA growth 28% 24% 63% 11% 1%
Net profit growth 35% 25% 72% 10% 1%
General ratios
PBV 11.06 9.37 5.84 4.24 3.26
Payout ratio 126% 123% 90% 90% 90%
Dividend Yield 7.7% 9.4% 12.3% 15.2% 15.4%
PE 16.40 13.12 7.31 5.86 5.82
Source:Company reports, InvestCap Research
Key Ratios
18. 16InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
FFBL - The little ‘giant’
Following the trend of sector profitability, 1HCY11 proved to be exceptionally
good for FFBL. Company's topline grew by a massive 51% YoY, primarily owing
to price appreciation experienced in DAP, where it grew by ~33%YoY.
Furthermore, product offtake supported this increase as volumes grew by a
solid 29% YoY. The company's gross margins also bolstered by massive 627bps
in 1HCY11, which was mainly due to magnitude of price increase, appreciating
by greater than the increase in raw material cost (Phos-acid, DAP's prime
raw material) that grew by 26% YoY.
An astounding 81% YoY in gross profit coupled with 4% YoY decrease distribution
charges led to a bolstered EBIT margins, rising by stupendous 900bps to .
Financial charges of the company remained almost at the same level as
previous year’s. As a result net profit of the company grew by mammoth
104% YoY.
Margins expected to remain robust
We have seen Phos-acid prices going up by 13% QoQ in 3QCY11, which is
expected to normalize going forward. In immediate terms, we foresee Phos-
acid prices reacting USD1,20-1,150/ton during 4QCY11. On international front,
we foresee supply to be on the rise as Saudi Arabian mining company, Ma'aden,
is expected to come online in 4QCY11. This additional supply is expected to
bring down the price of DAP to an extent in the international market, while at
current point in time, Pakistan is importing DAP at CFR price of USD695/ton.
Though in the short term, increasing cost of Phos-acid is expected to pull
down FFBL’s margins where the company enjoys primary margin of USD310/
ton currently. On the other hand, FFBL’s YTD primary margins have averaged
at ~USD325/ton. This rising cost of Phos-acid in the short term is expected to
be easily passed on to the consumer, as FFBL enjoys exclusive pricing power
being sole producer of DAP in Pakistan.
FFBL1HCY11 RESULT REVIEW
(Rs mn) 1HCY11 YoY 2QCY11 QoQ
Net Sales 18,017 51% 9,963 124%
Gross Profit 6,929 81% 4,182 152%
Gross Margin 38.4% 621bps 41.9% 780bps
Admin Cost 296 42% 182 159%
Selling and Distribution Cost 1,048 -4% 683 187%
Other Operating Income 741 50% 409 123%
Other Operating Charges 406 116% 235 137%
EBIT 5,921 108% 3,491 144%
Finance Cost 373 13% 266 248%
Profit After Tax 3,514 104% 1,956 126%
EPS (Rs) @ 934mn shares 3.76 2.09
EPS (Rs) @ 934mn shares 3.50 2.25
Source: Company Reports, InvestCap Research
Company Discripation
Fauji Fertilizer Bin Qasim Limited is a
subsidiary of Fauji Fertilizer Company
(51% stake), the company Limited is
the sole manufacturer of DAP in
Pakistan. FFBL previously was known
as FFC-Jordan because of 10% stake
held by Jordan Phospate Mines Co.
However, in 2003 Jordan Phosphate
Mines Co. sold its share, hence the
company was renamed as Fauji
Fertilizer Bin Qasim Limited (FFBL).
FFBL Gross Margins
25%
27%
29%
31%
33%
35%
37%
39%
41%
CY05A
CY07A
CY09A
CY11E
CY13F
CY15F
Bloomberg Code FFBL PK
No. of Shares 934.11mn
Avg Daily Vol (1-Yr) 4.21mn Sh
Last Closing Rs61.77
Target Price (Jun-11) Rs72.00
Upside Potential 16.56%
Dividend Yield (CY12) 15.17%
Total Return (CY12) 31.73%
Return in CY10 36.74%
Source: Company Reports, InvestCap Research
19. 17InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
Depreciating PKR to impact FFBL’s margins a bit
Since FFBL's prime raw material (Phos-acid) is imported and it is denominated
in USD terms, it stands prone to depreciation in PKR. We have done a
sensitivity that showcases impact of PKR depreciation on FFBL’s earnings
outlook. Phos-acid price has been on the rise off late due to global demand
of the commodity, which coupled with PKR depreciation may put pressure
on copmany’s primary margin, while its pricing power may provide partial
relief.
Outlook and Recommendation
Being country's sole DAP producer, FFBL's DAP offtake is not expected to go
down despite price expansions. However, DAP margins are at their record
high (primary margin at average USD311/ton) at the moment, and going
forward are expected to normalize to the level of around USD250/ton.
Strong dividends are the major investing trigger for the stock. We have 'Buy'
call on FFBL with Jun-12 Target Price of Rs72/share. The scrip currently offers
an upside of a decent ~17%, alongwith a shining CY12F and CY13F dividend
yield of an average ~15%. At current levels, FFBL is trading at PE of 6.11x and
6.49x for CY12 and CY13 respectively.
Source: NFDC, InvestCap Research
PKR DEPRECIATION IMPACT ON FFBL EARNINGS
Rupee Depreciation Change in earnings
5% -3%
6% -6%
7% -8%
8% -10%
9% -12%
10% -15%
Source: Company Reports, InvestCap Research
FFBL VALUATION BREAK UP
Rs mn CY11E CY12F CY13F CY14F CY15F Terminal
FCFE 6,179 7,924 9,367 8,775 10,673 65,881
Cost of equity 20% 20% 20% 20% 20%
Discounted FCFE 6,758 7,241 7,152 5,598 5,689 35,115
Accumulated FCFE 67,553
Number of shares (mn) 934
FCFE/share (Rs) (Jun-12 TP) 72
Source: Company Reports,, InvestCap Rsearch
-
100
200
300
400
500
600
700
2009A
2010A
2011E
2012F
2013F
0%
20%
40%
60%
80%
100%
Urea Production
Urea Sales
Capacity Utilization
FFBL urea production and sales
snapshot
(000 tons)
-
100
200
300
400
500
600
700
800
2009A
2010A
2011E
2012F
2013F
0%
20%
40%
60%
80%
100%
120%
DAP Production
DAP Sales
Capacity Utilization
FFBL DAP production and sales
snapshot
(000 tons)
VALUATION CRITERIA
Risk free 14.5%
Risk Premium 6.5%
Terminal growth 5%
-1
49
99
149
199
Jan-06
Sep-06
May-07
Jan-08
Sep-08
May-09
Jan-10
Sep-10
May-11
FFBL PE Bands
3x
5x
10x
15x
18x
(Rs bn)
20. 18InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
FFBL’S INCOME STATEMENTS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Net sales 36,725 43,257 56,180 59,784 59,482
Cost of Sales 27,060 29,794 37,198 41,213 41,312
Gross Profit 9,665 13,463 18,982 18,571 18,170
Distribution Expense 2,236 2,585 3,009 2,950 3,100
Administrative Expense 401 700 1,045 1,141 1,163
Operating profit 7,028 10,178 14,927 14,480 13,906
Financial Cost 1,460 934 905 269 287
Other Operating Expense 443 713 1,015 1,116 1,132
Other Income 998 1,033 1,495 1,098 930
Share of Associate's profit / (loss) (315) 121 186 219 243
Compensation from GOP - - - - -
Profit Before Tax 5,808 9,686 14,688 14,412 13,660
Taxation 2,024 3,171 4,908 4,974 4,767
Profit After Tax 3,784 6,514 9,781 9,438 8,893
EPS (Rs) @ 934mn shares 4.05 6.97 10.47 10.10 9.52
DPS (Rs) @ 934mn shares 4.00 6.55 9.70 9.37 8.57
FFBL'S BALANCE SHEETS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Equity
Issued and Paid up 9,341 9,341 9,341 9,341 9,341
Share Holder Equity 10,660 12,210 16,921 16,439 18,039
Liabilities
Current Liabilities 16,747 15,389 12,465 12,117 12,865
Non Current Liabilities 8,818 7,737 7,089 6,441 5,792
Equity and Liability 36,225 35,336 36,474 34,997 36,697
Assets
Current Assets 18,444 18,318 19,816 18,778 21,001
Non-Current Assets 17,781 17,018 16,658 16,220 15,695
Total Assets 36,225 35,336 36,474 34,997 36,697
FFBL'S CASH FLOWS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Cashflow from Operations 22,953 8,520 11,747 9,208 10,091
Cashflow from Investments (5,378) 2,858 (1,413) (617) (558)
Cashflow from Financing (15,869) (8,305) (9,939) (10,568) (7,442)
Net Cash Inflow/Outflow 1,707 3,072 394 (1,977) 2,091
Source:Company Reports, InvestCap Research
Financial Highlights
21. 19InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
FFBL’S KEY RATIO
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Liquidity ratios
Current Ratio 1.10 1.19 1.59 1.55 1.63
Quick Ratio 1.14 1.22 1.48 1.70 -
Captial structure
Times interest earned 5.65 12.30 17.90 58.72 53.08
Int bearing debt to equity 1.29 0.87 0.34 0.31 0.27
Total debt to equit 2.40 1.89 1.16 1.13 1.03
Returns ratios
Return on assets (RoA) 10% 18% 27% 27% 24%
Return on Equity (RoE) 36% 53% 58% 57% 49%
Return on Cap. employed 31% 49% 105% 102% 90%
Profitablity margins
Gross margin 26% 31% 34% 31% 31%
EBITDA margins 22% 27% 29% 26% 26%
Net profit margins 10% 15% 17% 16% 15%
Growth
Sales 37% 18% 30% 6% -1%
EBITDA growth 11% 39% 41% -3% -3%
Net profit growth 31% 72% 50% -3% -6%
General ratios
PBV 5.41 4.73 3.41 3.80 3.47
Payout ratio 99% 94% 93% 93% 90%
Dividend Yield 6.5% 10.6% 15.7% 15.2% 13.9%
PE 15.25 8.86 5.90 6.11 6.49
Source:Company Reports, InvestCap Research
Key Ratios
23. 21InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
ENGRO - The price king!
Engro Corp's core profitability was bolstered by a solid 49% YoY. However,
after inclusion of one-time accounting change corp’s profiability slid well
below market’s expectation.
Topline of the company grew by an impressive 37% YoY during 1HCY11.
However, cost of sales also grew by almost the same proportion, as a result
gross margins of the conglomerate were up by mere 77bps YoY. Engro Foods
was the top participant in the topline expansion of Engro Corp. Despite
expanding admin (up 36% YoY) and distribution cost (up 17% YoY), company’s
operating margins were up 153bps YoY, mainly because operating income
grew by a larger magnitude (up 49% YoY).
Earnings were expected in the bracket of Rs10-11/share during 1HCY11.
However, the company incorporated a one time accounting change, that
allowed them to incorporate financial charges from May-11 (2 months prior
to commissioning of the new plant) instead of capitalizing them along with
other expenses, which raised financial charges of Engro Corp, rocketed
upwards by 96% YoY. As a result the earnings of Engro Corp's prime bread
earner (Engro Fertilizer) was below expectations (EFert EPS at Rs1.9).
The above-mentioned one-off dampened Engro Corp's earnings for the said
period, however, the company remained glued to its history by offering DPS
of Rs2/sh.
Tweaking assumptions to have value fine-tuned
Keeping in view the recent gas curtailment scenario and lower than
contracted level of supply to EnVen, we have done few changes in the
price assumption of Urea, gas levels that we expect EnVen to enjoy, Urea
production figures and offtake numbers. Currently, ENGRO’s USD1.2bn plant
is receiving 80mmcfd gas supply from SNGP, while another 20 mmcfd
additional supply is being provided by the Mari network. As a result, the plant
is producing 3,500 tons of urea per day, against name-plate capacity of
3,850 tons (~91% capacity utilization).
ENGRO CROP 1HCY11 RESULT REVIEW
(Rs mn) 1HCY11 YoY 2QCY11 QoQ
Net Sales 46,084 37% 24,236 44%
Gross Profit 13,041 40% 6,916 50%
Gross Margin 28.3% 140bps 28.5% 50bps
Admin Cost 1,359 36% 744 31%
Selling and Distribution Cost 3,184 17% 1,636 19%
Other Operating Income 599 -3% 255 -47%
Other Operating Charges 734 29% 456 0%
EBIT 8,363 49% 4,333 61%
Finance Cost 3,674 96% 2,501 131%
Share of Income from JV 239 -8% 120 -6%
Profit After Tax 3,316 4% 1,274 -8%
EPS (Rs) @ 393mn shares 8.43 3.24
DPS (Rs) @ 393mn shares 2.00 2.00
Source: Company Reports, InvestCap Research
Engro Gross Margins
25%
30%
35%
40%
45%
50%
55%
60%
65%
CY05A
CY07A
CY09A
CY11E
CY13F
CY15F
Company Discripation
Engro Corporation is one of the
leading Pakistani business
conglomerates. Having had
undergone an employee led buyout
in 1992. Currently Dawood Hercules
holds 32% stake in the company.
Engro has expanded its businesses
phenomenally in the past two
decades. As a holding company its
subsidiaries include:
Subsidiary Stake
*Engro Fertilizers Ltd 100%
*Engro Foods Ltd 90%
*Engro Eximp Pvt Ltd 100%
*Avanceon Ltd 100%
*Engro PowerGen Ltd 100%
*Engro Polymers Chem Ltd 56%
*Engro Vopak Ltd 50%
Bloomberg Code ENGRO PK
No. of Shares 339.28mn
Avg Daily Vol (1-Yr) 2.09mn Sh
Last Closing Rs142.42
Target Price (Dec-11) Rs251.00
Upside Potential 86.1%
Dividend Yield (CY12) 5.61%
Total Return (CY12) 91.71%
Return in CY10 5.75%
Source: Company Reports, InvestCap Research
24. 22InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
We expect EnVen's capacity utilization to be at 77.5% for CY12 (down because
we expect capacity utilization to be at 65% during 1QCY12 and 4QCY12),
owing to gas outages during winter season. We assume the production and
offtake to be at ~1070k tons form new plant, total offtake is expected to be
at 1.9mn tons. This is our long term production assumption as well. On cost
front, we expect fuel gas cost per mmbtu to increase by 2.5% and feed gas
cost per mmbtu to increase by 5.25% ( on old plant), both increasing biannually.
In order to fight this increase in costs, we have assumed ENGRO to raise price
of its Urea by 4% annually.
Fertilizer business stability very important for Engro Corp
Engro Fertilizer is currently the bread and butter for the whole Engro Corp
(bottomline contribution of average 70%), and is going to be so in future as
well due to the attractive margins the company earns on its fertilizer (Urea)
sales. However, with acute gas supply shortages, production of Engro Fertilizer
has painted a different picture from what was expected prior to new
capacity coming online. Going forward, we expect gas supply situation to
gradually improve (as Kunal Pasaki field is expected to add 50-100mmcfd to
Sui network). This expected better supply with current level of product prices
makes Engro Fertilizer an attractive subsidiary of the conglomerate.
Ferlizer business holds largest share in Corp’s value
Engro Corp’s profitability and value share break up graph shows 5-year
average forecasted profitability of Corp’s existing subsidiaries coupled with
their individual value contribution to conglomerate’s target price. In this
regard, Engro Fertilizer leads the way in both the profitability and valuation
departments with average 70% and 63% share respectively.
Source: NFDC, InvestCap Research
-
500
1,000
1,500
2,000
2,500
CY11F
CY12F
CY13F
CY14F
CY15F
CY16F
CY17F
CY18F
CY19F
CY20F
0%
20%
40%
60%
80%
100%
Total Offtake
EnVen Production
Capacity Utilization EnVen(000 tons)
Long term offtake and EnVen production
-
500
1,000
1,500
2,000
2009A
2010A
2011E
2012F
2013F
0%
20%
40%
60%
80%
100%
120%
Urea Production
Urea Sales
Capacity Utilization
Engro production and sales
(000 tons)
Eximp
7%
Polymer
2%
Power
4%
Vopak
9%
Avanceon
1%
Food
14%
Fertilizer
70%
Profit Contributors
`
Fertilizer
63%
Food
14%
Avanceon
1%
Vopak
6%
Power
4%
Polymer
3%
Eximp
11%
Value Contributors
`
Source: Company Reports, InvestCap Research
Source: Company Reports, InvestCap Research
25. 23InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
As far as profitability and value contribution by other subsidiaries are
concerned:
• 3% is contributed by Engro Foods towards valuation and 7% towards
profitability
• Plagued Engro Polymer has 4% share in valuation, while contributes
2% in corp’s profit
• Engro Power enjoys valuation share of 11% and its profitability
participation is at 4%.
• Trading concern, Eximp has participation of 14% and 7% is towards
profitability
• Vopak and Avanceon have contribution of 6% and 1% respectively.
Their contribution towards profitability is at 9% and 1% respectively.
Decreasing interest rates to benefit Engro the most
With expected cut in the discount rate in up coming monitory policies of the
central bank, ENGRO's PKR denominated debt servicing should experience
contraction due to falling KIBOR, as a result of discount rate cut. We have run
a sensitivity, providing different scenarios at different interest levels and
their impact on ENGRO’s Target Price.
The table above highlights the relativity of financial leverage of Engro Corp
with interest rate volatility. In this regard, 50bps rate cut would increase the
target price of the company by 6%. In CY12 we expect policy rate to shed
100-150bps, which should lead to increase in the target price of ENGRO by
10-15%.
IMPACT OF INTEREST RATE CHANGE ON ENGRO
Interest rate decline Target Price Change
Base case (Rs/sh) 265 -
50bps 281 6%
100bps 291 10%
150bps 306 15%
200bps 322 22%
Source: Company Reports, InvestCap Research
26. 24InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
Outlook and Recommendation
Better expected profits from the Engro subsidiaries such as Engro Fertilizer,
Engro PowerGen, Engro Foods, and Engro Eximp (though not as much as
previous year’s), are expected to do their bit to offset the expected
profitability loss of the much plagued subsidiary, Engro Polymer and Chemicals
Limited.
We expect Engro Corp to turn the tide and once again prove as to why it has
been and still continues to be Pakistan's premier company as far as profitability
growth is concerned. We iterate a 'Buy on the scrip with Jun-12 Target Price
of Rs265/share, which offers a massive upside potential of ~92%. At current
levels, the company is trading at CY12F and CY13F PE of 2.70x and 2.51x
respectively.
ENGRO VALUATION BREAK UP
(Rs mn) CY11E CY12F CY13F CY14F CY15-20F Terminal
Fertilier (20,304) 16,283 9,049 4,331 127,914 142,605
Foods (4,172) (1,256) 460 1,083 24,646 79,818
Polymer (1,415) (805) (211) 52 13,833 23,378
Power (Div) 674 735 762 812 4,339 1,130
Eximp (Div) 959 1,689 2,041 1,781 11,286 13,956
Avanceon - 10 77 99 949 1224
Vopak (Div) 505 602 686 765 6,923 9,280
Engro Corp
Aggregate FCFF* (SoTP) (26,101) 15,564 9,553 5,522 189,890 271,287
WACC 14.2% 14.2% 14.2% 14.2% 14.2% 14.2%
Discounted FCFF (SoTP) (24,965) 16,011 9,593 5,438 56,401 56,425
Total Firm Value* 104,262
Number of shares 393mn
Jun-12 Target Price (SoTP) (Rs) 265
*Adjusted cashflows for Corp’s shares in the subsidiaries as well as for their leverage and cash balances
VALUATION CRITERIA
Risk free 14.5%
Risk Premium 7%
Terminal growth 5%
-1
49
99
149
199
249
Jan-
06
Sep-
06
May-
07
Jan-
08
Sep-
08
May-
09
Jan-
10
Sep-
10
May-
11
ENGRO PE Bands
3x
5x
10x
15x
20x
(Rs bn)
27. 25InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
ENGRO’S INCOME STATEMENTS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Net Sales 58,152 79,976 97,950 129,253 142,713
Cost of Sales 44,658 59,702 65,606 80,469 91,044
Gross Profit 13,494 20,274 32,344 48,783 51,668
Selling Distribution 6,215 8,290 7,410 8,319 8,870
Other Income 390 897 728 914 1,035
Other Operating Charges 844 958 1,323 2,004 2,232
Finance Cost 2,222 4,201 6,409 10,273 8,532
Share of Income from JV 459 555 555 662 754
Profit before Tax 5,062 8,277 18,485 29,763 33,824
Taxation 1,343 1,836 6,470 8,917 11,308
Profit after tax 3,719 6,441 12,015 20,846 22,516
Attributable to Equity Holders 3,807 6,790 12,071 20,754 22,275
Attributable to Minority Interest -88 -349 -56 92 241
3,719 6,441 12,015 20,846 22,516
EPS (Rs) @ 393mn shares 9.7 17.26 30.69 52.77 56.64
DPS (Rs) @ 393mn shares 6.0 6.0 6.0 8.0 8.0
ENGRO FERTILIZER CASH FLOWS
(Rs mn) CY09A CY10A CY11E CY12F CY13F
Cashflow from Operations 9,244 (14,611) 14,544 18,598 21,765
Cashflow from Investments (38,840) (14,695) (23,427) 9,354 (1,678)
Cashflow from Financing 28,274 24,280 (9,813) (13,064) (12,789)
Net Cash Inflow/Outflow (1,322) (5,026) (18,696) 14,888 7,298
Source:Company Reports, InvestCap Research
Financial Highlights
28. 26InvestCap Research
October 2011
FERTILIZER SECTOR 2011
A Publication of InvestCap Research
Pakistan Research
ENGRO KEY RATIOS
CY09A CY10A CY11E CY12F CY13F
Liquidity ratios
Current Ratio 1.07 2.06 0.46 1.05 1.05
Quick Ratio 0.34 1.73 0.05 0.56 0.58
Coverage ratios
Time Interest Earned 3.28 2.85 3.89 3.94 5.02
Profitablity margins
Gross margin 23% 25% 33% 38% 36%
EBITDA margins 12% 13% 25% 33% 30%
Net profit margins 6% 8% 12% 16% 16%
Growth
Sales 42% 38% 22% 32% 10%
EBITDA growth 0% 48% 139% 74% 1%
Net profit growth -12% 73% 87% 73% 8%
General ratios
PBV 1.45 1.37 1.37 0.95 0.72
Payout ratio 21% 12% 7% 4% 4%
Dividend Yield 1% 1% 1% 1% 1%
PE 14.71 8.25 4.64 2.70 2.51
Source:Company Reports, InvestCap Research
Key Ratios
31. October 2011
FERTILIZER SECTOR CY11
A Publication of InvestCap Research
Pakistan Research
MONEY MARKET DESK
(92-21) 3520 8751, 3520 8757, 3520 8767
Naeem Ul Hassan
Nadeem Dar
Mehmood Qureshi
Asif Hussain
Nasir Suria
EQUITY SALES DESK
(92-21) 3520 8727, 3520 8735, 3520 8730-31
Shahrukh Naqvi
Noureen Moin Khan
Nabeel Jafar
Owais Imam
Abdul Samad Tariq
Irfan Ali Muhammad
RESEARCH (92-21) 111 111 097 (8634)
Khurram Schehzad Economy, Strategy and Oil
Farhan Bashir Khan Economy, EP, Refineries and Telecom
Asad Siddiqui Fertilizers, Chemicals, Banks and Construction
Abdul Azeem Automobile, Gas Distribution, Power and Textiles
Mazhar A. Sabir Mutual Funds and Insurance
Yawar uz Zaman FMCGs, Paper Board and Construction
Rao Aamir Ali Database Manager
Asim Abbas Research Distribution
FOREIGN EXCHANGE DESK
(92-21)3520 8778-87
Raheel Abbass
Atif Ali
Naheed Fatima
Qazi Owais
Zain Jafri
Zeeshan Atique
Hammad Rasheed
COMMODITY SALES DESK
(92-21)3521 35226-28
Ali Kazmi
Shoaib Memon
Shoaib Machiara
CORPORATE FINANCE
(92-21)3521 35226-28
AsherSaeed
Salman Shahab
Kiran Javed
32. This report is for information purposes only and we are not soliciting any action based upon it. The material is
based on information we believe to be reliable but we do not guarantee that it is accurate and complete.
Invest Capital Markets Limited will not be responsible for the consequence of reliance upon any opinion or
statement herein or for any omission. This report or any part of it may not be reproduced or published without
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