Ffc
This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA
Overview
Download & View Ffc as PDF for free.
More details
- Words: 1,015
- Pages: 3
SC SECURITIES (PVT) LTD. Corporate Member: Karachi Stock Exchange (Guarantee) Ltd. Corporate Office: 706, 7 th Floor, Business Plaza, Mumtaz Hasan Road, Off. I.I. Chundrigar Road, Karachi. Tel:2412542-3 Stock Exchange Office: 441, 4 th Floor, Karachi Stock Exchange Building, Stock Exchange Road, Karachi. Tel : 2432367 Email: research@scsecurities
March 7, 2005
FAUJI FERTILIZER COMPANY LTD. Current Rate PKR 162 Target Price PKR 186 Recommendation: We recommend a BUY for the stock as it’s trading at the discount of 16% to its fair value of PKR 186 at which we been a rrived using different valuation techniques including DCF method and using PE multiple of 13 coupled with the estimated earnings of Rs. 14.33 for the FY05.
52 weeks trading data Current rate High Low Average Daily Vol (mn shares) KATS Code
162 164.5 117.35 571,745 FFC
Fertilizer Industry The FY2003-04, witnessed acceleration in economy with real GDP growing by 6.4 per cent. Though the agriculture sector registered growth of only 2.6 per cent, still the fertilizer nutrient consumption was 6.7 per cent higher over preceding year. The Kharif 2003 recorded increase of only 1.3 percent over Kharif 2002, this made the prices for most Kharif crops attractive and resulted in improved liquidity with farmers. This coupled with abundant availability of credit triggered fertilizer consumption in Rabi 03-04, which showed an increase of 11.1 percent in nutrients over preceding year.
SC SECURITIES (PVT) LTD. Corporate Member: Karachi Stock Exchange (Guarantee) Ltd. Corporate Office: 706, 7 th Floor, Business Plaza, Mumtaz Hasan Road, Off. I.I. Chundrigar Road, Karachi. Tel:2412542-3 Stock Exchange Office: 441, 4 th Floor, Karachi Stock Exchange Building, Stock Exchange Road, Karachi. Tel : 2432367 Email: research@scsecurities
Farmer’s income of preceding crop season, water availability, commodity support prices and fertilizer prices are the strongest in forecasting demand for the next season. Based on these, the fertilizer consumption for FY2004-05 is projected at 3350 thousand nutrient tones i.e. 4.3% higher from previous year. The performance of Kharif 2004 looks good, which may improve fertilizer consumption in Rabi 2004-05. However, the only concern is of supply side. Fauji Fertilizer Company Fauji Fertilizer Company Limited is a public company and its shares are quoted on the Karachi, Lahore and Islamabad stock exchanges of Pakistan. The registered office of the Company is situated in Rawalpindi. The principal activity of the Company is manufacturing, purchasing and marketing of fertilizers and chemicals, including investment in other fertilizer and chemical manufacturing operations. The Fauji Fertilizer Company (FFC) reported the highest ever after tax profit of Rs. 4.004 billion for the year 2004, increase of 27% over last year. The increase is due to higher urea sales, savings in distribution cost, lower finance cost and dividend received from FFBL. Urea sales revenue recorded a growth of 20% over last year. As a result, per share earnings of the Company grew by Rs. 2.91 over earnings for the previous year. FFC declared highest ever dividends by recommending final cash dividend of Rs. 3 per share and 15% bonus shares for 2004, in addition to Rs. 12 per share in cash and 15% bonus issue declared earlier on interim results, from the available distributable profits of the Company. FFC continues to be the proud winner of the Karachi Stock Exchange “Top 25 Companies Award” for listed companies for the tenth consecutive year. FFC’s contribution of Rs. 15.74 billion to the national economy by way of value addition in 2004 increased by 5% over last year, in addition to foreign exchange savings of $544 million through import substitution on production of 2,174 thousand tones of urea fertilizer in the FY2004. Market Share in the Fertilizer Industry (2003-04) During FY2003-04, a total quantity of about 6,850 thousand tones was handled by marketing agencies. The private sector share was 80.3 per cent in total fertilizer distribution (78.9 per cent during FY200203) in which FFC leading the market with 48.7 per cent.. Public sector agency (NFML) share was about 19.7 per cent in total fertilizer quantities handled.
MARKET SHARES IN FERTILIZER INDUSTRY
DCL 6% ECPL 19%
NFML 20%
Private Importers 6%
FFC NFML ECPL DCL Private Importers
FFC 49%
SC SECURITIES (PVT) LTD. Corporate Member: Karachi Stock Exchange (Guarantee) Ltd. Corporate Office: 706, 7 th Floor, Business Plaza, Mumtaz Hasan Road, Off. I.I. Chundrigar Road, Karachi. Tel:2412542-3 Stock Exchange Office: 441, 4 th Floor, Karachi Stock Exchange Building, Stock Exchange Road, Karachi. Tel : 2432367 Email: research@scsecurities
Products Share in Total Fertilizer Consumption Among the products, urea has the highest share that is 67.7% for the FY2003-04 of which Fauji Fertilizer Company (FFC) does the bulk of production that is about 60% of the total urea production. Average prices of urea (Sona) and urea (Kissan) surged by 5.1% and 4.5 per cent, respectively. During FY2003-04, an average increase in urea price compared with yearly average of FY2002-03 was from Rs. 18 to 22/bag.
Financial Highlights …………..
PRODUCTS SHARE IN TOTAL FERTILIZER CONSUMPTION (2003-04) Urea NP 6%
DAP 16%
SSP 3%
DAP SSP CAN 5%
Others 3%
NP CAN Others Urea 67%
FY2003A FY2004A FY2005F Sales (m) Profit Before Tax (m)
21,035 4,931
21,027 6,103
22,078 7,365
Profit After Tax (m) Net Profit Margin (%) EPS DPS
3,145 14.95 10.66 10.00
4,004 19.04 13.57 12.00
4,861 22.01 14.33 12.80
Source: Company annual accounts & SCS estimates
Summary: We recommend a Buy for the share owing to it’s future growth, market share, aggressive marketing and investment strategies and a possible expansion over the next 2-4 years. On account of the boom in agriculture sector coupled with the weather conditions, we expect growth in urea demand and consequently better results for the upcoming years. From : Our research desk (92-21) 241-2542 – 5 [email protected] This report has been prepared by SC securities and is provided for information purposes only. Under no circumstances is to be used or considered as an offer to sell or solicitation of any offer to buy. While all reasonable care has been taken to ensure that information provided is not untrue however data has been collected from the reliable sources, we make no representation as to its accuracy
March 7, 2005
FAUJI FERTILIZER COMPANY LTD. Current Rate PKR 162 Target Price PKR 186 Recommendation: We recommend a BUY for the stock as it’s trading at the discount of 16% to its fair value of PKR 186 at which we been a rrived using different valuation techniques including DCF method and using PE multiple of 13 coupled with the estimated earnings of Rs. 14.33 for the FY05.
52 weeks trading data Current rate High Low Average Daily Vol (mn shares) KATS Code
162 164.5 117.35 571,745 FFC
Fertilizer Industry The FY2003-04, witnessed acceleration in economy with real GDP growing by 6.4 per cent. Though the agriculture sector registered growth of only 2.6 per cent, still the fertilizer nutrient consumption was 6.7 per cent higher over preceding year. The Kharif 2003 recorded increase of only 1.3 percent over Kharif 2002, this made the prices for most Kharif crops attractive and resulted in improved liquidity with farmers. This coupled with abundant availability of credit triggered fertilizer consumption in Rabi 03-04, which showed an increase of 11.1 percent in nutrients over preceding year.
SC SECURITIES (PVT) LTD. Corporate Member: Karachi Stock Exchange (Guarantee) Ltd. Corporate Office: 706, 7 th Floor, Business Plaza, Mumtaz Hasan Road, Off. I.I. Chundrigar Road, Karachi. Tel:2412542-3 Stock Exchange Office: 441, 4 th Floor, Karachi Stock Exchange Building, Stock Exchange Road, Karachi. Tel : 2432367 Email: research@scsecurities
Farmer’s income of preceding crop season, water availability, commodity support prices and fertilizer prices are the strongest in forecasting demand for the next season. Based on these, the fertilizer consumption for FY2004-05 is projected at 3350 thousand nutrient tones i.e. 4.3% higher from previous year. The performance of Kharif 2004 looks good, which may improve fertilizer consumption in Rabi 2004-05. However, the only concern is of supply side. Fauji Fertilizer Company Fauji Fertilizer Company Limited is a public company and its shares are quoted on the Karachi, Lahore and Islamabad stock exchanges of Pakistan. The registered office of the Company is situated in Rawalpindi. The principal activity of the Company is manufacturing, purchasing and marketing of fertilizers and chemicals, including investment in other fertilizer and chemical manufacturing operations. The Fauji Fertilizer Company (FFC) reported the highest ever after tax profit of Rs. 4.004 billion for the year 2004, increase of 27% over last year. The increase is due to higher urea sales, savings in distribution cost, lower finance cost and dividend received from FFBL. Urea sales revenue recorded a growth of 20% over last year. As a result, per share earnings of the Company grew by Rs. 2.91 over earnings for the previous year. FFC declared highest ever dividends by recommending final cash dividend of Rs. 3 per share and 15% bonus shares for 2004, in addition to Rs. 12 per share in cash and 15% bonus issue declared earlier on interim results, from the available distributable profits of the Company. FFC continues to be the proud winner of the Karachi Stock Exchange “Top 25 Companies Award” for listed companies for the tenth consecutive year. FFC’s contribution of Rs. 15.74 billion to the national economy by way of value addition in 2004 increased by 5% over last year, in addition to foreign exchange savings of $544 million through import substitution on production of 2,174 thousand tones of urea fertilizer in the FY2004. Market Share in the Fertilizer Industry (2003-04) During FY2003-04, a total quantity of about 6,850 thousand tones was handled by marketing agencies. The private sector share was 80.3 per cent in total fertilizer distribution (78.9 per cent during FY200203) in which FFC leading the market with 48.7 per cent.. Public sector agency (NFML) share was about 19.7 per cent in total fertilizer quantities handled.
MARKET SHARES IN FERTILIZER INDUSTRY
DCL 6% ECPL 19%
NFML 20%
Private Importers 6%
FFC NFML ECPL DCL Private Importers
FFC 49%
SC SECURITIES (PVT) LTD. Corporate Member: Karachi Stock Exchange (Guarantee) Ltd. Corporate Office: 706, 7 th Floor, Business Plaza, Mumtaz Hasan Road, Off. I.I. Chundrigar Road, Karachi. Tel:2412542-3 Stock Exchange Office: 441, 4 th Floor, Karachi Stock Exchange Building, Stock Exchange Road, Karachi. Tel : 2432367 Email: research@scsecurities
Products Share in Total Fertilizer Consumption Among the products, urea has the highest share that is 67.7% for the FY2003-04 of which Fauji Fertilizer Company (FFC) does the bulk of production that is about 60% of the total urea production. Average prices of urea (Sona) and urea (Kissan) surged by 5.1% and 4.5 per cent, respectively. During FY2003-04, an average increase in urea price compared with yearly average of FY2002-03 was from Rs. 18 to 22/bag.
Financial Highlights …………..
PRODUCTS SHARE IN TOTAL FERTILIZER CONSUMPTION (2003-04) Urea NP 6%
DAP 16%
SSP 3%
DAP SSP CAN 5%
Others 3%
NP CAN Others Urea 67%
FY2003A FY2004A FY2005F Sales (m) Profit Before Tax (m)
21,035 4,931
21,027 6,103
22,078 7,365
Profit After Tax (m) Net Profit Margin (%) EPS DPS
3,145 14.95 10.66 10.00
4,004 19.04 13.57 12.00
4,861 22.01 14.33 12.80
Source: Company annual accounts & SCS estimates
Summary: We recommend a Buy for the share owing to it’s future growth, market share, aggressive marketing and investment strategies and a possible expansion over the next 2-4 years. On account of the boom in agriculture sector coupled with the weather conditions, we expect growth in urea demand and consequently better results for the upcoming years. From : Our research desk (92-21) 241-2542 – 5 [email protected] This report has been prepared by SC securities and is provided for information purposes only. Under no circumstances is to be used or considered as an offer to sell or solicitation of any offer to buy. While all reasonable care has been taken to ensure that information provided is not untrue however data has been collected from the reliable sources, we make no representation as to its accuracy
Related Documents
Ffc
May 2020 1
Ffc
November 2019 2
Ffc- Thong Ke So Luong Hang Ngay
November 2019 5