Page 117 - RusRPTNov20

greenfield breeding farms, raising the share of industrial players in consumption to 85% and almost entirely eliminating imports. In the first three quarters, pork prices stayed flat y/y (RUB83/kg) while poultry prices declined 5% y/y to RUB96/kg, albeit from a higher base. As far as Russian agricultural major​ ​Rusagro​ is concerned, VTBC sees pork output up 17% y/y to 285,000 tonnes in 2020 with the prices for live pork staying flat y/y at RUB75/kg. "As concerns the new farming season, we note sugar and vegetable oil as the key driving factors for our model, with the former seeing production down 30% y/y countrywide while the latter sustains impressive margins on the upbeat seed harvest," VTBC reminds. The bank thus forecasts Rusagro’s 2021 EBITDA up 13% y/y while Enterprise Value/Ebitda is estimated at 6.2x, which it sees as an "appealing exposure" and maintains a Buy call with 32% estimated total return (ETR) add Rusagro. Previously Rusagro posted ​1.8-fold year-on-year jump in Ebitda in 2Q20 under IFRS​, beating the consensus expectations by 10%.
According to the National Pork Union, meat consumption in Russia stayed flat y/y in 9mo20 at 7.8mnt​. Pork was the only type of meat to see an increase in volumes (up 5% y/y to 2.92mnt), while the other segments were marginally down. In 2019, meat consumption in Russia stood at 11.2mnt, implying 77kg per capita, which is 3% above the biological norm. The flattish trend YTD comes from the staple nature of consumption amid real incomes being under pressure (-4% y/y lower in 1H20) as well as the disruptive nature of pork production on prices. In 9mo20, pork output increased 10% y/y to 3.1mnt as industrial players added greenfield breeding farms, raising the share of industrial players in consumption to 85% and almost entirely eliminating imports. In the first three quarters, pork prices stayed flat y/y (RUB83/kg) while poultry prices declined 5% y/y to RUB96/kg, but from a higher base. VTBC sees pork output up 17% y/y to 285,000t in 2020F while the prices for live pork stay flat y/y at RUB75/kg. Sugar and vegetable oil are the key driving factors for the sector, with the former seeing production down 30% y/y countrywide while the latter sustains impressive margins on the upbeat seed harvest.
117 ​RUSSIA Country Report​ November 2020 www.intellinews.com