FFC leads May 2024 fertilizer sales despite overall decline in Urea and DAP offtake

Decline in urea sales

The fertilizer sector in Pakistan experienced a decline in Urea sales in May 2024, with total sales clocking in at 392,000 tons, down 15% year-over-year (YoY). However, this figure shows a 20% month-over-month (MoM) increase due to a low base in April.

The key figures are as following,:

Company	Feb-24	Mar-24	Apr-24	May-24E	YoY	MoM	5MCY24E	YoY
FFC	228	293	188	230	11%	22%	1,173	21%
EFERT	197	215	75	77	-34%	2%	775	-6%
FFBL	12	21	35	55	62%	55%	155	-3%
FATIMA	74	102	26	15	-79%	-43%	315	21%
Others	33	40	2	15	-44%	755%	128	-53%
Total	543	671	327	392	-15%	20%	2,546	2%

Key company performances

• Fauji Fertilizer Company (FFC): Expected to post Urea sales of 230,000 tons, reflecting an 11% YoY increase and a 22% MoM rise.
• Engro Fertilizer (EFERT): Anticipated to show a 34% YoY decline due to the main Enven plant being offline for a turnaround that started in April 2024.

DAP sales trends

DAP off-take for May 2024 is projected to be around 34,000 tons, showing a significant drop of 48% YoY and 63% MoM. The breakdown for DAP sales is as follows:

Company	Feb-24	Mar-24	Apr-24	May-24E	YoY	MoM	5MCY24E	YoY
FFC	17	0	29	6	-32%	-79%	53	59%
EFERT	25	21	10	2	-85%	-80%	95	37%
FFBL	63	78	52	24	-39%	-54%	246	26%
FATIMA	3	2	0	1	NM	NM	6	-69%
Others	7	5	1	1	-77%	-30%	16	-64%
Total	115	107	93	34	-48%	-63%	415	15%

Price adjustments

Fauji Fertilizer Company (FFC) and Fauji Fertilizer Bin Qasim Limited (FFBL) have reduced DAP prices by Rs1,800 per bag. The new prices are Rs11,141 per bag for FFC and Rs11,191 per bag for FFBL. This adjustment aims to align local prices with international DAP prices amidst declining demand, potentially impacting FFBL’s margins.

Outlook for investors

The fertilizer sector continues to offer stable dividends, with FFC and EFERT rallying 22% and 42%, respectively, year-to-date (YTD). FFC is favored for its favorable market dynamics and is expected to provide a dividend yield of 19% for CY24E.

Company	P/E (x)	D/Y	Market Cap (Rs mn)	CY24E	CY25F
FFC	3.72	3.54	18%	19%	175,722
EFERT*	6.26	5.48	16%	18%	212,326
FFBL	3.58	3.60	6%	8%	40,662

Disclaimer:

The information in this article is based on research by JS Global. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.