全球-农业-全球农业商业：播下成长的种子.docxVIP

EQUITIESAGRIBUSINESS January 2019HSBC 0 Global Research s:// research.hsbc s:// research.hsbc Sowing the seeds of growthV We leverage our global expertise to identify potential outperformers in Agribusiness across EM and DM countries We remain bullish on fertilizers and see attractive valuations and near-term share price catalysts We prefer Buy rated OCI, CF, NTR, and MOS in the fertilizer space; UPL in crop chemicalsDisclaimer Disclosures: This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it NitrogenWe see a sustained recovery driven by capacity closures in China Recent surge in Chinese exports and potential lower input costs for marginal players should not derail the recoveryWe expect prices to rebound during the spring application season Short-term volatility likely, but price trajectory pointing upwards Nitrogen prices have seen a sustained recovery over the last couple of years due to a combination of: i) supply rationalization in China; ii) rising costs for marginal producers in China and Europe; and iii) improving utilization rates globally (including new capacity additions) to meet incremental demand growth. In addition, supply side uncertainties stemming from US sanctions on Iran and unavailability of gas for Chinese producers further contributed to a surge in prices over the last few months. We expect a seasonal rebound in Nitrogen prices during the spring application season (latelQ 2019 and early 2Q 2019) as pent-up demand emerges in key Northern Hemisphere regions; until then we see some price pressure likely to. On the other hand, timely buying along with prospects of higher demand from additional corn acres adds further upside risks to prices. Urea on track to a sustained recovery over the medium term We believe urea is on track for a sustained recovery indicated by substantially higher prices and improving margins for the indu