Company Overview

 Fauji Fertilizer Bin Qasim Limited is a Public Limited Company

incorporated in 1984

 The dynamic corporate strategy of FFBL is to enhance customer

satisfaction and earn their respect

 It has a modern Granular Urea and Di-Ammonium Phosphate

(DAP) fertilizers manufacturing complex, built at a cost of US$
468 Million and located in Eastern Zone of Bin Qasim, Karachi
Strengths

 Higher expected earnings from

Associates

 Companies include FFBL Power

company (FPCL), Foundation
wind power (FWEL) and Askari
bank (AKBL)

 Pakistan's agricultural sector is

increasing at 2% per annum
which will prove good for FFBL
 Weakness

 The supply of Gas is from Oil

and Gas development company
(OGDC)

 The supply is not regular but

gas shortages are evident

 The parent company FFC has its

supply from MARI which is much
better then OGDC
 Opportunities

 The subsidiary companies are now

doing very well

 Some companies are expected to

give its maiden dividend

 Government support package can

be vital
 Porters five forces
 There are no such
Substitutes of fertilizer
yet in the market.

 The company
currently has a single
supplier of gas which
is OGDC

 Rival companies are

Fatima fertilizer and
Engro fertilizer
 Continued…

 No such threat of
competitors because FFC
and FFBL hold 51% of
market share.

 FFBL turned into profit and

has bright future prospects

 Fertilizer business is not

very attractive for the
investors so new entrants
are not expected
Valuation

 improved GP margins in
DAP segment underpinned
by removal of cap on DAP
prices

 higher expected profit

from associates and
subsidiaries FFBL Power
Company (FPCL),
Foundation Wind Power
(FWEL) and Askari Bank
(AKBL).
 Valuation
 the only producer of DAP in
Pakistan. Currently company
is securing contribution
margin of~US$160 per ton
vs. average of ~US$140 in
2017. Margins are expected
to improve to ~US$170‐180
in 3Q and 4Q2018 on back
of peak demand in the start
of winter crop (rabi season).
Thereafter, implied
contribution margins are
estimated at~US$170.
 Sensitivity Analysis

The growth rate is expected to increase by 2% because the current economic

condition of Pakistan is not satisfactory.

And we believe interest rate to be at 10%

 Method of Comparable

We believe that Fatima fertilizer and Engro Fertilizer are the main
competitors of the company.

The P/E and P/B ratios of the companies are closer to FFBQL
Sales and Volume
Prices and Market share
Associate Company
Improvements
Future Earnings share
Breakup of Valuation
 Buy call
 On the basis of valuation
and looking at the price of
FFBL, the price at 23rd
November 2018 is Rs 41.27

 Relative Strength Indicator

at 59.63

 We give an upside call of Rs

66/share, offering an upside
of 57% approximately, till
December 2021
Thankyou!
Made by:
Mohammed Usman Sajid