Page 133 - RusRPTJan21

(6.5% now) but not less than €165/t (EUR 9.75/t).
· Introduction of an export tariff of 15% on sunflower oil but not less than €135/t. The initiative could be implemented by YE20 if the self-regulation among industry participants on price caps for sugar and vegetable oil fails.
Rusagro​ sees a 50% and 30% contribution to revenues and EBITDA from the vegetable oil business; it has been the company’s core segment since the acquisition of SolPro. We note that Rusagro produced 1mnt of grains this season, and its grain sales account for 7% of total sales in our 2021F revenue forecast. For next year, VTBC model the breeding output of pork at 330,000t, which would require some 980,000t of feed.
VTBC previously highlighted two downside risks to the investment case, one of, which was the sugar and sunflower oil price cap, now materialised, while the second one is the ongoing investigation into a​ ​potential sugar market cartel​.
By the end of the second week in December a 30% export duty is to be introduced on sunflower seeds ​(but no less than €165/t) from 1 January - 30 June 2021, according to First Deputy Prime Minister Andrey Belousov. In the previous season (ended August 2020), Russia saw a record high harvest of sunflower seeds (15.4mnt) as well as unmatched export volumes of 1.15mnt in September-April. The export of sunflower seeds was banned from 12 April until 13 June, in order to secure domestic supply and limit domestic price growth. In MY21 (started in September), the Ministry of Agriculture estimates that the seed harvest will drop 16% y/y to 13mnt, compared with internal crushing capacity of 17mnt. Limiting exports would increase the internal supply and put additional pressure on prices, both of, which would be in favour of sunflower seed crushers. In our coverage, Rusagro is one of the leading crushers in the country (1.6mnt capacity), and so could potentially benefit from the aforementioned tax. The company sees 50% of revenues and 30% of EBITDA from the vegetable oil segment in our 2021F model. In 9mo20, segment profitability was a strong 14% EBTIDA margin, which is ahead of our mid-cycle forecast. The robust supply of seeds and elevated prices for sunflower oil (up 40% YTD as of December) mean that there is an upbeat financial outlook for the segment for this season, in our view.
The Ministry of Economic Development has proposed an export tariff of 15% on sunflower oil but not less than EUR 135/t. ​The initiative could be implemented by YE20 if the self-regulation among industry participants on price caps for sugar and vegetable oil fails.
The proposition adds to the list of measures aimed at limiting price inflation for soft commodities that include:
133 ​RUSSIA Country Report​ January 2021 www.intellinews.com