Boost in Fertilisers to Drive IQ's Earnings Growth in 2019

Amazon invests in www.facebook.com/QatarTribune Tesla rival startup www.youtube.com/QatarTribuneChannel Rivian www.twitter.com/Qatar_Tribune PAGE 14 SUNDAY, FEBRUARY 17, 2019 DOW25,774.37 QE 9,941.50 SENSEX 35,808.95 GOLD 1,320.80 US drafts WTO reform to halt +231.10 PTS -239.19 PTS -67.27 PTS +0.53% handouts for big & rich states PAGE 14 PRICE PERCENTAGE PRICE PERCENTAGE 15.67 BRENT 66.01 +2.23% WTI 55.47 +1.95% SILVER +0.91% Quick read Qatar’s CPI drops 1.6 percent y-o-y in January 2019 HNA cuts stake in Deutsche to 6.3% cent, followed by “recreation percent, “education” (9.25 PSA said the CPI of January 2019 reached and culture” (5.05 percent), percent), “furniture and CHINESE conglomerate HNA has “clothing and footwear” household equipment” (1.33 cut its stake in Deutsche Bank to 107.57 points (with base year of 2013) (4.04 percent), “housing, wa- percent), “health” (0.10 per- 6.3 percent, according to a filing ter, electricity and other fuel” cent). with the US Securities and Ex- QNA Statistics Authority (PSA), on (2.67 percent), “food and The CPI of January 2019 change Commission. That marks DOHA Saturday. beverages” (2.51 percent), excluding “housing, water, a reduction from 7.64 percent of PSA said the CPI of Jan- “transport” (2.12 percent), electricity and other fuel” voting rights reported in the most QATAR’S January 2019 con- uary 2019 reached 107.57 “restaurants and hotels” group stood at 107.94 points, recent filing in Germany. HNA, sumer price index (CPI) de- points (base year 2013). (0.13 percent), and “miscel- a decrease of 1.21 percent even with the reduced holding, creased by 1.59 percent year- The y-o-y price decrease laneous goods and services” compared to December 2018, would remain one of the largest on-year (y-o-y) and 0.97 was primarily due to the de- (0.04 percent). and a decrease of 1.29 per- shareholders in Germany’s larg- percent month-on-month creasing prices observed in An increase in price levels cent compared to the CPI est lender. (REUTERS) (m-o-m), according to data eight groups, namely: “com- was observed in four groups of January 2018, PSA data released by the Planning and munication” by 11.45 per- People shop at a clothing store in Doha. namely: “tobacco” by 127.19 shows. Asian spot LNG Boost in fertilisers to drive prices drop to 17-month low on IQ’s earnings growth in 2019 tepid demand billets started to be sold ex- IQ reported a ternally was being used in the REUTERS were delayed this week due UAE steel facility previously,” SINGAPORE to lower production, sources 51.7% annual jump the report said. have said. in 2018 net profit “The company also noted ASIAN spot prices for liquefied But the delay was due to product prices saw around natural gas (LNG) continued minor glitches at the plant to QR5 bn: QNBFS 12 percent growth over 2017, their downward spiral this which have since been re- mostly driven by strength in week, hitting a 17-month low solved, one of the sources said. SATYENDRA PATHAK fertilisers (urea) in the sec- as the market moved further In Australia, at least one DOHA ond half of 2018 and uptick away from the peak winter- train was down briefly at in steel prices following iron demand period and inventories Chevron Corp’s Wheatstone BOOST in urea realisations ore recovery and shortage of remained high in the region. LNG plant but operations have will drive earnings growth some key consumables (elec- Spot prices for March resumed since, sources said. of Industries Qatar (IQ) in trodes). delivery to Asia LNG-AS fell Chevron declined to comment. 2019, QNB Financial Services “IQ also benefited from its to $6.50 per million British Train 3 of Chevron’s Gor- (QNBFS) has said in its latest new steel marketing strategy thermal units (mmBtu) this gon LNG project in Western company report. of selling its steel volumes week, down 20 cents from the Australia is still down after “Considering its overall through Muntajat from May previous week to their low- it was shut in mid-January strong 2018 performance is 2018 onward,” the report est since Sept. 8, 2017, trade following a mechanical issue, now in the rear-view mirror said. sources said. sources said. and neutral trends in steel “Polyethylene (PE) prices April prices are estimated Woodside Petroleum’s and petrochemicals, we think improved slightly driven by at about $6.30 per mmBtu, the Pluto LNG facility has also IQ will need a material boost strength in crude. Overall sources said. resumed full output after a in urea realisations to post group revenue, assuming Demand in China re- brief outage. earnings growth in 2019. Our proportionate consolidation, mained tepid as many facto- With prices falling, there is 2019 earnings estimate is flat came in at QR16.3 billion, ries there were still shut for also less incentive for produc- at QR5 billion. Sequentially which grew by 16 percent on Lunar New Year celebrations, ers to keep output at high for the first quarter of 2019, 2017,” the report said. trade sources said. The Lunar levels, an industry source said. trends look to be flattish-to- “IQ wrote-off its remain- New Year fell on Feb. 5 and 6 LNG exports from US LNG down given product pricing,” ing carrying value in SOLB this year, but the festival typi- terminals are returning to the report said. Steel in Saudi Arabia to the cally lasts for about two weeks. normal after loadings were de- Commenting on the com- tune of QR49.5 million. The While temperatures in layed earlier this month when pany’s fourth quarter results, company also recognised Beijing and Shanghai briefly natural gas flows to terminals the report said, “A moderate QR389 million (of its maxi- dipped below normal levels, fell to their lowest level in miss in the fourth quarter net Industries Qatar’s product prices saw around 12 percent growth over 2017, mostly driven by strength in mum exposure of QR489 mil- they are expected to rise next almost a year due to mainte- income caps a strong year. fertilisers (urea) in the second half of 2018 lion) as provisions on financial week, weather data on Refini- nance work and a fog along the The miss against our model guarantees given to lenders in tiv Eikon showed. US Gulf Coast. was due to steel and petchems ed only twice a year,” it said. spite some planned and un- SOLB Steel,” it said. “It snowed in Beijing but Supply remained ample in with strength in urea leading In 2018, the report said, planned maintenance at some Lots of cash and zero it’s not that cold still, plus the Asia with Kuwait Petroleum to an in-line fertiliser perfor- IQ reported a 51.7 percent facilities. debt indicates expansion in factories are still shut, so the Corp and Indonesia’s Donggi- mance.” year-on-year (YoY) jump in As far as fertilisers are “In petrochems, sales vol- the horizon, the report said inventory levels are still quite Senoro LNG export plant “As far as fertilisers are net profit to QR5 billion on concerned, revenue of umes improved y-o-y as some adding IQ maintains a very high,” a China-based trade offering cargoes for March and concerned, revenue of QR1.3 increased product prices and plants returned to normal lev- strong balance sheet with source said. April. billion was bang in-line with sales volume. QR1.3 billion was bang els following unplanned out- group cash reaching QR13.1 Several unplanned outages Indonesia’s Pertamina our model, while net income Sales volumes increased in-line with our model, while ages in early 2017. Fertiliser billion with debt of just QR26 failed to lift prices, indicating sold four cargoes it had of- was 3 percent ahead of our marginally (about 4 percent) net income was 3 percent sales volumes were almost million. just how weak demand is cur- fered for March 2019 to early estimate. Quarterly figures against 2017 and reached a ahead of our estimate, flat despite a few planned “We continue to recom- rently, trade sources said. 2020 from its Bontang plant, of Qatar Fertiliser Company new record for the group, the QNBFS report said and unplanned outages, while mend a market perform with Loadings of LNG cargoes although price and buyer (Qafco) are approximations report said adding production those in the steel segment saw a price target of QR126 on the at Malaysia’s Bintulu export details could not immediately as segment results are report- volumes remained stable de- significant growth on 2017, as stock,” QNBFS said. plant, operated by Petronas, be confirmed. China-US trade talks ‘making a final sprint’ Trade war, strong dollar big risks to corporate margins 500 companies has been more Moreover, worries that a REUTERS “It is hoped that the two Analysts forecast an annual S&P 500 Energy firms resilient, with first-quarter rev- tight labour market will drive SHANGHAI sides will maintain the good earnings decline of 0.5% for first quarter enue growth estimated at 5.3 up wages have been limited in momentum of the current O A recent drop in oil percent, based on Refinitiv’s earnings calls for the fourth- CHINESE state media on Sat- consultations and strive to REUTERS strategist of Yardeni Research. prices has hurt margins for data. quarter reporting period, which urday expressed cautious opti- reach an agreement within the NEW YORK “We don’t expect that la- energy companies, a Credit Suisse strategists is nearing an end.

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