KARACHI: The National Fertiliser Database Centre (NFDC) has released fertiliser production and off-take numbers, by virtue of which during the three-quarters of CY11 (January to September), fertiliser sector production rose by 2 per cent, over the same period last year.
Asad Siddiqui, analyst at InvestCap, mentioned that the growth represented “solid increase of 19 per cent year-on-year in production of CAN, as well as additional production coming in from Engro's new plant, EnVen.”During the month of September 2011, fertiliser sector's production fell by 5 per cent month-on-month, due to decrease in DAP production by 25 per cent MoM.
The analyst, however, pointed out that the off-take, on the other hand revealed a rosy picture.
During the month of September 2011, total industry off-take was propped up by 1 per cent MoM. Unusual DAP off-take, which grew by massive 61pc MoM due to pre-buying phenomenon was the prime reason for the healthy off-take during the period.”
Also during nine-month CY11 total off-take of the country rose by 5 per cent YoY, which was mainly due to the base effect, as during Aug-10 the country-wide off-take had decreased sharply due to floods in Punjab.
In another report prepared by Farhan Mahmood, analyst at Topline Securities said that the fertiliser numbers for the month of Sept 2011, released by NFDC revealed increase of 5 per cent in total off-take to 5.9 million tons during nine-month CY11.
Though fertiliser availability remained the major issue due to gas curtailment and delay in imports, higher off-take was primarily due to higher demand for other nitrous and phosphate like CAN, NP and NPK, which witnessed increase in sales by 36 per cent to 0.95 million tons.
Sale of urea remained almost flat at 4.2 million tons due to non-availability amid lower production (down 3pc, including new Enven) and delay in imports (down 50pc).
Moreover, only in the month of Sept 2011, total fertiliser off-take stood at 776 thousand tons, up 13 per cent year-on-year.
In three quarters 2011, total off-take remained higher by 30 per cent compared to corresponding period of previous year.
Reason of higher urea off-take (36pc) was primarily due to low base as last year sales were dampened due to floods. However, on quarter-on-quarter basis, sales for September stood higher by 21 per cent primarily due to 7.6 per cent rise in urea sales (better availability due to reduced gas curtailment) and sharp increase of 117 per cent in DAP sales (pre-Rabi buying and fear of supply shortfall in an anticipation of higher gas curtailment).
Company-wise data showed that FFC and Engro posted an increase of 12pc and 48pc, respectively, in urea sales during nine-months 2011. Increase in the latter is primarily due to production from its new plant.
Similarly, FFBL's flag ship DAP sales stood higher by 32 per cent mainly due to delay in DAP imports (down 52pc). However FFBL's urea sales declined by 9pc, primarily due to higher gas curtailment on Sui network.
Analyst at InvestCap said that at current levels, they had put up Dec-11 target price for FFC at Rs230, FFBL at Rs72 and Engro at Rs210. “Fundamentally there has been no shift as such in the industry dynamics as far as FFC and FFBL are concerned,” said the analyst, adding, “while market prices of the stocks have taken severe battering, thereby providing highly attractive entry levels (FFC now stands with 15 months dividend yield (DY) of 22 per cent, while FFBL is offering a solid DY of 26pc.”