汇丰银行全球农业全球农业商业播下成长的种子2019150页

Disclaimer&Disclosures:ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit:AlexandreFalcao,SanthoshSeshadri,SriharshaPappu,NicholasPatonandSaurabhJain1EQUITIES●AGRIBUSINESSJanuary2019WhyreadthisreportWeleverageourexposureintheUS,India,Europe,China,LatinAmerica,andMiddleEasttocomeupwithacohesiveandcomprehensiveviewoftheagribusinessvaluechainWeoutlineourexpectationforNPK,andupdateourpriceforecastsandSDestimatesWeanalyzetheimpactofNPKpricesontheearningsmomentumofcompaniesWeaddressinvestorquestionsrelatedtoaccelerationinChineseureaexportsandtheimpactofpotentiallylowerinputcostsformarginalplayersWeanalyzeindetailcropfundamentalsandoutlookforIndia,themajorgrowthmarketforfertilizersWehighlightourpreferredplaysinthespace(page8)andidentifykeysharepricecatalystsEQUITIES●AGRIBUSINESSJanuary20192Fertilizer101Nitrogen(N)Phosphate(P)Potash(K)BenefitstoplantEssentialforstemandcellstructuregrowth,increasesheightAcceleratedplantmetabolism,optimizesusageofN&KBetterrootdevelopment,fillsoutinnercellstructure,helpsresistdroughtRecommendedapplicationEvery4-6months,nitrogenevaporatesandcannotbeskippedAnnual,butcanbeskippedforayearwithoutsignificantlossofyieldAnnual,butcanbeskippedforayearwithoutsignificantlossofyieldPopularproductsandtypicalnutrientcontentperunitUrea(46%),Ammonia(82%),UAN(32%),AN(34.5%),CAN(28%),AmmoniumSulphate(21%)DAP(46%),MAP(52%),SSP(22%),TSP(48%),Phosphoricacid(74%),MGA(54%),SPA(70%)MOP(60%),Potassiumsulphate(50-54%)GlobalAgconsumption(millionnutrienttonnes)-2017/18107(56%)48(25%)35(19%)KeycropsWheat,rice,corn,andfruitandvegetables(65-70%oftotal)Wheat,rice,corn,soybean,oilseeds,andfruitandvegetables(c75%)Rice,corn,wheat,soy,oilpalm,fruitandvegetables,andfibercrops(c80%)Industrialuse(%oftotal)25-30%12%9%PrimaryindustrialusePlastics,resins,adhesives,andemissioncontrolsSoftdrinks,foodadditives,andmetaltreatmentsSoaps,watersofteners,deicers,drillingmuds,andfoodproductsKeyrawmaterials/processNaturalgas(70-80%oftotalcostofammonia)andnitricacidPhosrock(50-60%ofcost),sulphur(10-15%)andammonia(15-20%);phosrockisminedfromdeposits(typicallyshallowpit)MinedfromdeeprockdepositsandsaltlakesIndustrystructureHighlyfragmentedFewersuppliersthanN,minimaldisciplinewithahighfocusonvolumes;consolidatingmarketHistoricallyoligopolistic;landscapechangingwithnewsupplierscomingonline;topsixaccountfor80%ofshareKeyindustryplayersCFIndustries,Yara,OCI,IndustriesQatar,SAFCO,Nutrien,Koch,TOAZ,Eurochem,andGroupDFMosaic,Maaden,Nutrien,OCP,Yuntianhua,Wengfu,andPhosAgroNutrien,Mosaic,Uralkali,Belaruskali,ICL,K+S,SQM,ArabPotashCompanyTopproducers(2017)China,theUS,India,andRussiaconstitutec55%ofworldcapacityChina,Morocco,andtheUSaccountforc60%ofworldcapacityCanada,Russia,Belarus,andChinaconstitute77%ofworldcapacityTopconsumers(2017)China,India,theUS,andBrazilconstitute65%ofconsumptionChina,India,theUS,andBrazilconstitute66%ofconsumptionChina,India,theUS,andBrazilconstitute61%ofconsumptionTopimporters(2016)India,theUS,andBrazil(c38%oftotalurea)India,Brazil,theUS(c40%ofDAP/MAP)Brazil,theUS,China,India(c78%oftotal)Topexporters(2016)Russia,Qatar,China,andSaudiArabia(c48%ofurea)TheUS,China,andMorocco(c65%oftotal)CanadaandFSU(c75%oftotal)Historicalgrowthrate(15yr)2.0%2.0%2.6%Source:Companyreports,IFA,CRU,FAO,HSBC3EQUITIES●AGRIBUSINESSJanuary2019ExecutiveSummary42019outlook6Nitrogen9Phosphates14Potash18Companies25NutrienLtd(NTRUS)26MosaicLtd(MOSUS)27CFIndustries(CFUS)28OCINV(OCINA)29UPLLtd.(UPLLIN)31CoromandelInternational(CRININ)32IndustriesQatar(IQCDQD)33Disclosureappendix43Disclaimer48ContentsEQUITIES●AGRIBUSINESSJanuary20194Whatdoes2019holdforGlobalAgchem?WehavecollaboratedwithourGlobalAgribusinessteamtocomeupwithacomprehensiveviewonthesectorandhighlightourpreferredplays.In2019,webelievenitrogenpricesarepoisedtogrowhigher(urea,+9%),drivenbycapacityrationalizationandlessnewcapacitycomingonline.Phosphatepricesshouldeaseupby5%duetonewsupply,butlowerinputcostsshouldsupportmargins,whilepotashpricesshouldremainfirmwithminorincreases(c3%)andnewpotashsupplyshouldnotbedisruptive,inourview.Theyearinreviewandtheyearahead:2018wasawatershedyearforfertilizercompaniesasNPKpricesandearningsstagedasolidrecovery,underscoringthatthetroughmaybebehindus.However,thesectorhasunderperformedtheS&P500Indexoverthelastthreemonthsduetovolatilityinfertilizerpricesandamacrosell-off.Wethinkthesharepriceweaknessisoverdoneandthepotentialvolatilityincommoditiesduetoshort-termsupplypressureshouldnotderailthestructuralrecovery.Thetargetpricesforourpreferredplaysimplysignificantupsidepotentialandtherecentsell-offshouldbeconsideredanopportun