Engro Fertilizers Limited (EFERT): A mixed bag with attractive yield – By FCEL Research

<ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">We initiate coverage on Engro Fertilizer Company Ltd. (EFERT) with a NEUTRAL call and target price of PkR69.5/sh. </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">The improved fertilizer dynamics have already been incorporated in the share price, in our view, with EFERT gaining 24% FY18TD. </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">However, negatives from i) DAP tax regime change hurting trading margins, and ii) expiry of concessionary gas agreement in CY23 pulls our valuation downward thereby limiting upside. </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">&nbsp;EFERT benefits from the recent improvement in local urea dynamics w...