Page 58 - UKRRptSept18

9.2.6 Agriculture corporate news
Ukrainian poultry producer MHP has released a robust the second quarter of 2018 trading update that saw a 21% y/y surge in poultry prices in USD terms but flattish sales volumes, VTB Capital (VTBC) said in a note. reported on August 6. “Upbeat prices have been in place for five consecutive quarters and to us that reflects a return to mid-cycle levels as well as the company’s successful attempts to optimise its product mix on the export markets (46% of the total in the second quarter of 2018),” VTBC said in a note. “The figures support our aggressive estimate for 2018F adjusted EBITDA of $450mn while the EV/EBITDA multiple of 5.3x remains appealing to us. Our 12-month Target Price of $18 returns an ETR of 50%; Buy reiterated.” In the second quarter of 2018, MHP saw flattish poultry sales volumes of 153,137 tonnes, as production remains at full capacity and the new greenfield volumes from Vinnitsa Phase 2 are going to come in gradually over the next two years. Prices were up 20-21% in UAH and USD terms and highlight a return to mid-cycle levels, VTBC says, as well as MHP’s efficient work on the export markets and its ability to optimise the product mix to the tastes of local clients. Export accounted for 46% of total sales, remaining flat q/q.
Net revenue at Ukrainian egg producer Ovostar Union jumped by 74% year-on-year to $63.5mn in January-June, according to its interim report released on August 30. The improvement was driven by surging sales in both segments: shell egg revenue advanced 87% y/y to $46.5mn, while egg product revenue improved 55% y/y to $17mn. Exports sales jumped 83.1% y/y to $27.3mn, to 43% of sales in the first half of 2018 (vs 40.1% a year ago). Ovostar’s Ebitda surged 97% y/y to $13.8mn in January-June. The company’s bottom line improved 2.67-fold y/y to $10.4mn, while ts operating cash flow before working capital changes advanced 109% y/y to $16.5mn in the first half of the year. The company’s total debt decreased 23% YTD to $11.4mn, while net debt swelled to negative $10.6mn vs. negative $1.3mn as of end-2017. Andriy Perederey at Kyiv-based brokerage Concorde Capital believes that Ovostar’s strong egg prices (the company’s local average selling price climbed 26.4% y/y to $0.056 per unit and average export price rose 17.6% y/y to $0.064 per unit in January-June) and higher volumes supported the company’s financials. "Usually, egg prices have the highest seasonal growth in the fourth quarter, which should boost Ovostar’s results even more in the second half of the year," he added in a note on August 30.
Leading Ukrainian agricultural concern Astarta saw its revenue fall by nearly a third (30%), while EBITDA dropped by more than third (38%) in the first half of 2018, the company said. The farmer and leading sugar producer reported €175.1mn in net revenue in the first half of 2018, according to its August 16 filing, which is 30% less y/y. The company had declining revenue in all its main segments, including sugar (-38% y/y to €67.5mn) and crop farming (-38% y/y to €49.8mn). The company’s EBITDA decreased 38% y/y to €60.1mn in the first half of 2018. Farming EBITDA improved 13% y/y to €51.9mn, becoming the key contributor to Astarta’s profit. EBITDA in its sugar segment plunged 82% y/y to €7.4mn, which was a result of weak sugar prices. The company said overall sugar stockpiles in Ukraine are currently at low levels, before the approaching start of the sugar production season and it expects domestic sugar prices to be relatively stable in the short term, unlike global sugar prices, which are expected to decrease further. Astarta’s bottom line was €37.3mn in the first half of 2018, or 49% less y/y. The company’s
58 UKRAINE Country Report September 2018 www.intellinews.com