AKD Securities Limited Equity Research - Daily Report (08-07-2021)

FLASHNEWS:

LDA Plans Upgrades for Lahore’s Katchi Abadis to Enhance Living Conditions

LDA to Auction Prime Commercial Plots in Lahore’s Finance and Trade Central

DHA Quetta to Hold Sector A6 Ballot on May 18, Offers Instalment Relief

Karachi Administration Orders Evacuation of Decaying Buildings for Public Safety

Faisalabad Electric Supply Company Promotes 18 Junior Engineers to Senior Positions

Brokerage

AKD Securities Limited Equity Research – Daily Report (08-07-2021)

July 8, 2021

Karachi, July 08, 2021 (PPI-OT): Pakistan Fertilizer: Faujis on a march ahead!

We revisit our investment case on Fauji Fertilizer Bin Qasim Ltd (FFBL) and Fauji Fertilizer Company Ltd (FFC) on the back of continued uptrend in international fertilizer prices. DAP/urea prices in international markets are currently at US$650/420 per MT, translating into local price of PkR6, 400/4,200 per bag, respectively.

Based on the aforementioned bull cycle, we incorporate DAP primary margins for FFBL at US$190/MT for CY21, which are expected to normalize to US$150/120 per MT CY22/23F onwards (earlier assumptions: US$150/120/120 per MT for CY21/22/23F). Our revised urea prices are at PkR1, 675/bag for our investment horizon.

Our revised standalone earnings for FFBL and FFC for CY21/22F stand at PkR5.09/3.84 per share and PKR17.78/18.03 per share, respectively. We re-iterate our Buy stance on both FFBL (TP: PkR37/sh, upside: 34% at last close) and FFC (TP: PkR145/sh, upside: 37% at last close).