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Chemicals – Initiation – 20181121

Sector note 24/11/2018    312


  • We expect a VAT policy amendment in 2018F or 2019F to boost industry sentiment and lift the fertiliser producers’ gross margins from 2019F onwards.
  • We project 2018-20F demand growth to return to the historical rate of 2-3% as the sector recovers from the demand trough in 2016.
  • However, we do not anticipate strong growth in product prices over 2018-20F due to a slight global supply overhang outweighing stable demand growth.
  • We initiate coverage on the chemical sector with an Overweight rating.

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