| FATIMA - Fatima Fertilizer Company Ltd. |
| Fertilizer | Urea Offtake May’26 |
| Ahsan Muhammad Asif 6/2/2026 12:00:00 AM |
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May’26 urea sales came in at ~419k tons, essentially unchanged from 418k tons a year ago, per provisional figures. Compared to April, offtake was down 10% as the market cooled off after farmers front-loaded purchases last month amid fears of price hikes tied to Middle East instability.
The trend varied by company. FFC sold 257k tons, well above 207k tons in May’25. FATIMA and AGL also gained, with 87k tons and 31k tons vs 54k tons and 15k tons SPLY. EFERT went the other way, falling to 43k tons from 142k tons last year.
For Jan-May’26, total urea offtake is tracking 9% higher YoY at 1,920k tons vs 1,768k tons, helped by stronger farm incomes. FFC is driving the growth with offtake up 29%YoY to 1,099k tons. Meanwhile, EFERT and FATIMA are both down 11%YoY, at 431k tons and 275k tons.
On the stock side, industry-wide inventory fell to 990k tons from 1,316k tons SPLY. EFERT still carries the heaviest load at 637k tons, with FATIMA at 221k tons and FFC at 112k tons.
We prefer Fatima & FFC. |
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| Property Sector: Emerging Relief Measures |
| Ahsan Muhammad Asif 6/1/2026 12:00:00 AM |
| The FBR, Ministry of Finance, and IMF are reportedly discussing tax relief measures for the real estate sector to revive activity and attract overseas Pakistani investment.
Possible measures include:
- Lower withholding tax on property transactions.
- Reduction in Capital Gains Tax (CGT).
- Further rationalization of FBR property valuations.
- Steps to improve market liquidity.
- Incentives for overseas Pakistanis.
Market chatter suggests transaction taxes may be reduced significantly, but no final approval has been announced yet.
Our coverage companies, LUCK, FECTC, POWER, FCCL |
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| SBP Next Treasury Bill Auction |
| SCS Research update 6/1/2026 12:00:00 AM |
| The next SBP Treasury Bill auction is expected to see stable to slightly higher cut-off yields. The current 3M yield is 12.5683%.
Recent auctions have shown an upward trend in yields as the market adjusts to the latest increase in the SBP policy rate. Higher government borrowing needs may continue to put pressure on yields, while strong liquidity in the banking system is likely to support demand and limit any sharp rise.
The 6M and 12M tenors are expected to see a modest increase in yields, with current rates at 13.0558% and 13.6996%, respectively, while the 3M tenor may remain relatively stable. A higher cut-off yield would reflect expectations of persistent inflation and a cautious monetary policy stance.
Overall, the market does not expect an immediate rate cut, and yields are likely to remain firm in the near term. The monetary policy is expected to be held on 15 June 2026, making this the last auction before the MPC decision. |
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| EV & Hybrid Tax Review Ahead of FY27 Budget |
| Ahsan Muhammad Asif 6/1/2026 12:00:00 AM |
| The government is reportedly considering withdrawing preferential GST rates for hybrid and electric vehicles in the upcoming FY27 budget as part of broader tax rationalization measures. If implemented, GST on EVs could rise from 1% to 18%, while hybrid vehicles may also be taxed at the standard GST rate.
Among listed companies, SAZEW appears most exposed due to its strong reliance on Haval hybrid SUV sales. INDU could also face pressure through Corolla Cross Hybrid demand, while HCAR may see slower adoption of its future hybrid offerings. In addition, NPL and NCPL have indirect exposure through their stake in NexGen Auto (JAECOO), making the budget outcome important for their growth narrative.
Overall, any withdrawal of EV and hybrid tax incentives would likely be negative for SAZEW, INDU, NPL, and NCPL, while also slowing momentum in Pakistan’s emerging new-energy vehicle market. |
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| NATF - National Foods Ltd. |
| _National Foods (NATF): Eid ul-Adha boom_ | SCS Update |
| Ahsan Muhammad Asif 5/29/2026 12:00:00 AM |
| We expect NATF to experience a seasonal uplift in sales during the Eid al-Adha period, which will be reflected in its 4Q posting in FY26. This is due to trademark spices, recipe mixes, sauces, and BBQ-related product categories that may have been consumed during Eid al-Sacrifice. However, while the seasonal demand impact remains positive, the market will likely focus more on the sustainability of growth beyond the festive period.
NATF continues to benefit from its established distribution network and strong positioning within the packaged food segment, supporting demand resilience despite broader economic pressures.
We estimate 4QFY26 earnings to clock in at ~PKR 13.3/share (Cumulative FY26 Earnings could be PKR 35.6/share). NATF is currently yielding at P/E multiple of 10.53x. In addition, the food sector is currently trading at approximately 15.3x earnings, which suggests further upside potential for the stock given NATF’s earnings momentum, strong brand equity, and defensive business profile.
SCS expects NATF to experience a seasonal uplift in sales during the Eid al-Adha period, which will be reflected in 4Q.
SCS Research |
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