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Food Sec, Mkt. Cap. (KSE): Sector Outlook: Food Univ. P/E (2011F) Food Univ. Div. Yield (2011F): Food Univ. Ear. Growth (2011F): Rs287bn Positive 7.79x 15.4% -19.7%
220% 200% 180% 160% 140% 120% 100% 80% 60% 40% Sep-10 Dec-10
In today's Value Seeker, we present a profitability review of the listed FMCGs of Pakistan, which shows a massive growth in the 1HCY11 (Jan-Jun11), along with its future outlook.
Jun-11
54,370 15,287 28.1% 3,013 5.54%
1HCY11
69,679 19,099 27.4% 4,346 6.24%
Mar-11
1HCY10
YoY
28% 25% -0.71% 44% 0.70%
Sep-11
1HCY11
139% 34% 23% 20% 8% N/A 86% 71% 2.06%
Since turn of the year, Fertilizer sector of Pakistan has been left out with no option but to increase their prices in order to recover the margins lost due to low level of production as a result of unannounced and extended gas curtailments by the gov't. Major brunt of this was felt by manufactures on the Sui Northern Pipelines Limited (SNGPL) network, as the
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level of curtailment on the said supplier was more than 25%, with Engro Fertilizer's new plant getting affected the most. However, since Jul-11 onwards supply situation has improved and has boosted up the supply of the sector. During the Kharif harvesting season, price of urea bag reached as high as Rs1,800 (at dealer level). However, with better supply from the said plant has boosted the supply of urea in the market, this coupled with off peak season for urea (DAP is primarily used in sowing of Rabi crops) prices of urea have came down by Rs100-150/bag at dealer level. However, there has been no change in the ex-factory price of the commodity. Thus, our earning expectations for fertilizer sector remains intact. We will release our detailed note on the Fertilizer sector shortly, with complete analysis of the sector and its major players coupled with an outlook. At current levels, we maintain 'Buy' call on FFC and ENGRO with Dec-11 TPs of Rs195/sh and Rs187/sh respectively, while have a 'Hold' call on FFBL with Dec-11 TP of Rs56/sh.
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