A production line of Lam Thao Fertilizers and Chemicals JSC in Phu Tho Province (Photo baophutho.vn) Sharesof three of the four biggest listed fertiliser manufacturers on the twonational stock exchanges tumbled in 2016, led by Lam Thao Fertilizers andChemicals JSC (LAS), down 55.2 percent for the year.
PetroVietnamFertilizer and Chemicals Corporation (DPM) and PetroVietnam Ca Mau FertilizerJSC (DCM) lost 23.2 percent and 21.3 percent, respectively.
OnlyBinh Dien Fertilizer JSC (BFC) gained 9.3 percent in 2016 with positiveearnings.
Fertilisermanufacturing encountered difficulties in recent years with fertiliser pricescontinuously falling due to oversupply. In 2016, droughts and salt intrusion inthe south negatively affected agricultural production which drove down demandeven further.
Inaddition, fiercer competition from China and ASEAN countries, as well as fakeand poor-quality products hurt domestic fertiliser companies.
BothPetroVietnam Fertilizer and Chemicals and PetroVietnam Ca Mau Fertilizer had tolower their business targets following poor performance in the first ninemonths of last year.
PetroVietnamFertilizer and Chemicals cut its revenue target by 13.4 percent for 2016, from 9.1trillion VND (402.7 million USD) to 7.9 trillion VND, and decreased its netprofit by 18 percent to 1.14 trillion VND.
PetroVietnamCa Mau Fertilizer trimmed its 2016 revenue target by 13 percent from 5.85trillion VND to 5.1 trillion VND and net profit from 648 billion VND to 620billion VND.
LamThao Fertilizers and Chemicals performed worst when its nine-month revenue andnet profits dropped 18.3 percent and 57 percent, respectively year-on-year.
BinhDien Fetilizer saw its revenue and profit go up 15 percent and 19 percent,respectively.
Theend of the El Nino phenomenon is expected to improve weather conditions tosupport agricultural production in the south and drive demand for fertiliser.
Inaddition, the global fertiliser market is starting to firm up in 2017 amidexpectations that demand in Europe, the US and Latin America will pick up afterfive years of decline. Prices of major products like ammonia, urea, phosphatesand potash began rising early this year.
Witha positive outlook on the global market, Vietcombank Securities Co hassuggested investors consider investing in fertiliser stocks this year.
Accordingto analysts at VNDirect Securities Co, fertiliser companies often pay high andstable dividends and stock prices have declined steeply. With high expectationsof rising demand and prices, fertiliser stocks are forecast to pick up this year.
However,they said fertiliser prices can only rise drastically if the sector receivesthe Government’s support through tariff protection measures to compete withimported products. Besides, domestic companies hope the Government will exemptfertiliser products from VAT.-VNA
