Analyst:

Muhammad Sarfraz Abbasi

sarfraz.abbasi@atlascapital.com.pk
(+92-21)-111-226-100 (Ext.403)
Morning Pulse Jan 20, 2011

Fertilizer Sector: FFBL Result Preview… offtake were recorded at 627k tons and 709k tons
HOLD
respectively. This decline in offtake was mainly due to
Synopsis… devastating floods in the country and gas curtailment. Market Snapshot
We reinitiate our coverage on Fertilizer sector by sharing Nevertheless, increase in prices by fertilizer players to Index Chg %
our detailed analysis and results expectations for Fauji compensate the production losses helped FFBL in KSE 30 12325.84 -92.24 -0.74
Fertilizer Bin Qasim Limited (FFBL). The company is having strengthened monetary sales. Urea and DAP KSE 100 12577.61 -80.55 -0.64
expected to announce its annual financial results on average per bag prices during the year under review KSE ALL 8721.38 -52.98 -0.60
Pakistan Research

Tuesday, 25th January 2011. As per our expectations, were hovering around PRs861.42 and PRs2669.92
FFBL is likely to post Profit After Tax (PAT) of PRs6.11bn for against last year when average per bag prices for Urea
CY10 translating into an EPS 6.54 posting substantial rise and DAP were recorded at PRs768.58 and PRs2032.25
of 61.37% over the corresponding period of last year respectively posting an increase of 12.08% and 31.38%
when company had recorded PAT of PRs3.79bn and over last year. This upsurge in prices is expected to Market Cap(PRs bn) 39.58
EPS PRs4.05 respectively. We expect FFBL to announce enable company to post a sharp increase of 19.85% in Shares Outstanding (m) 934.11
a final cash dividend of PRs3.45 (full year dividend of its top line to PRs44.02bn against PRs36.73bn last year. Bloomberg FFBL.PA
PRs6.50). In our today’s report we present result 12M Avg. Volume (m) 3.79
expectations on FFBL for CY10. Increase in other income and decline in financial
(PRs m) CY09 CY10E Change cost may jack up profitability…
Net Sales Revenue 36,725 44,015 20% We anticipate other income of company to post
12M FFBL relative performance vs KSE
Cost of Sales 27,059 30,237 12% generous growth of 71.35% to PRs1.17bn in CY10 as 139%

Gross Profit 10,877 13,778 27% against PRs682.76m last year. We expect Pakistan 123%
FFBL KSE-100

Distribution Cost & Admin Expenses 2,633 3,460 31% Maroc Phosphore (PMP) to contribute PRs291.17m in
107%
Operating Profit 7,802 9,745 25% other income as against the loss of PRs.314.91m was
Other Income 683 1,170 71% booked last year. On the other hand, financial charges 91%

EBIT 7,268 10,021 38% are expected to decline by 37.97% to 905.57m against 75%
Financial Charges 1,460 906 -38%
1.45bn in CY09. This impact is expected to come

Apr-10

Aug-10

Oct-10
Jan-10

Feb-10

Jun-10

Jul-10

Sep-10

Nov-10

Dec-10

Jan-11
Mar-10

May-10
Profit Before Tax 5,809 9,115 57%
through loan payback as the company has offloaded
Taxation 2,024 3,008 49%
Profit After Tax 3,785 6,107 61%
around PRs1.04bn long term loans from its balance
EPS (PRs) 4.05 6.54 61% sheet since December CY09. This anticipated rise in
Offtake volume (k tons) other income and fall in financial charges would likely
Urea 627 519 -17% to boost up bottom line.
DAP 709 639 -10%
Total 1,336 1,158 -13% Recommendation…
Our DCF based target price for the FFBL is PRs41. The Atlas Capital Markets (Pvt.) Ltd
Top line to post an enthusiastic growth despite of scrip is currently trading 3.68% above its fair value based B-209, Park Towers, Clifton, Karachi
expected plunge in volumetric sales… on yesterday’s closing. HOLD. Equity Research: Equity Sales:
Tel: 92 (21) 5376125 Tel: 92 (21) 5368261-8
FFBL is expected to record total offtake volumes of Fax: 92 (21) 5376126 Fax: 92 (21) 5376122
1.34m tons in CY10. Urea and DAP offtake are expected
Money Market: Corporate Finance:
to record at 519k ton and 639k tons posting a decline of Tel: 92 (21) 5376128 Tel: 92 (21) 5824991
17.20% and 9.87% over last year when Urea and DAP Fax: 92 (21) 5376129 Fax: 92 (21) 5376122

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Limited accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All Fax: 92 (21) 5376126
information is provided without warranty and Atlas Capital Markets (Pvt.) Limited makes no representation of warranty of any kind as to the accuracy or Atlas Research is available on Bloomberg and
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