Shares for Portfolio in Fertilizer Sector

Shares for Portfolio in Fertilizer Sector


Engro Chemical

Positives for Engro Chemical Growth:

1) Inventory gains on DAP from rising global prices
3) Better than expected performance by Engro Foods;

Risks

1) Natural hazards affecting fertilizer demand



Fauji Bin Qasim

Positives for Fauji Bin Qasim Growth:

1) Recovery in DAP demand
2) Increase in subsidy will insulate FFBL from rising input costs
2) Backward integration through investment in phosphoric acid plant in Morocco

Risks for Fauji Bin Qasim

1) Delay in Saudi expansion in DAP beyond 2011;
2) Significant increase in DAP or major crop price subsidy




Fauji Fertilizer

Positives for Fauji Fertilizer Growth:

1) Allows best exposure to urea market
2) Growth in urea margins
3) Most defensive play in the sector
4)
Risks for Fauji Fertilizer

1) Longer shut downs than expected for plant debottlenecking;