Page 111 - RusRPTDec18

as well) and the robust supply of distressed assets in the agricultural segment that could be assessed for acquisitions. To fund those, the company might consider an SPO in 2019-20, according to management comments.
YTD, Rusagro’s GDRs have returned a flattish performance, as the operating results in the first half of 2018 were downbeat. The turnaround in the sugar business came ahead of our expectations and is, we think, still being overlooked by the market. We see the EV/EBITDA multiple improving from 7x this year to 5.5x for 2019 and consider valuations as attractive.
Russian's largest producer of turkey meat Damate of Naum Babaev will expand into producing lamb meat in the Stavropol region, Vedomosti daily reported on November 28 citing the investment agreement signed with the regional authorities. Representatives of the company commented that while there was no large-scale production of lamb in Russia, the demand the meat from retailers is high. Industry players, unions and retailers confirmed to Vedomosti that main producers of lamb meat in Russia are small fragmented farms. Damate plans to invest RUB2bn, part of which is borrowed from Russian Agricultural Bank, to produce up to 15,000 tonnes of lamb meat annually after the construction of the project is completed in 18 months. To compare, Damate produced 62,000 tonnes of turkey meat in 2017. Total output of lamb in Russia in 2017 was 222,000 tonnes, with a market growth of 1.5%. Should the market see more large players supplying quality meat, the marker could grow by 5%-10% annually, with high export potential, Damate told Vedomosti. Another large meat producer Miratorg plans to launch its own lamb production in several Russian regions with a total capacity of 35,000 tonnes and investment of RUB27.5bn ($415mn). Damate emerged as the market leader in the turkey meat segment in 2016, snapping the largest share from Eurodon (aka Evrodon). While in 2018 Eurodon was reportedly staging a comeback, latest reports suggested that the company is in trouble and looking for new investors.
Russia's state development bank Vnesheconombank (VEB) filed bankruptcy proceedings against one of Russia's largest poultry producers Eurodon (Evrodon), Vedomosti daily said on November 14. bne IntelliNews previously noted that Russian poultry market could see increased consolidation ahead of the upcoming opening of the vast Chinese market to Russian frozen poultry supplies. VEB and VEB Capital hold 74% in Eurodon capital that has reportedly been struggling to make ends meet and was looking for new investors. Company founder Vadim Vaneev still holds 11%. VEB has reportedly injected RUB2.6bn in Eurodon. VEB will now seek to attract an investment bank and an independent auditor to develop a new model for Eurodon and revamp the company. In December 2016 and spring-summer 2017 Eurodon was hit by three outbreaks of bird flu bringing a total damage of RUB2.6bn. The last outbreak was at two out of its 24 turkey farms.
Shareholders of Russian Alfa Bank, controlled through a chain of offshore companies, also control 16% in Russia's milk producer Ekoniva, controlled by German Ekosem-Agrar, Vedomosti daily reported on November 21. In August Ekoniva said it is preparing for an IPO. Ekoniva is Russia's largest producer of raw milk, controlled by Stefan Durr (42.8%), the head of the company Rolf Zuern (14.7%), the management of the company (26.5%), and minority shareholders. The company produced about 0.3mn tonnes of milk in 2017 over 0.39mn hectares of managed land. In January-June 2018 Ekoniva posted €96.6mn in revenues, up by 24%, and boosted Ebitda by 46% to €45mn. Reportedly Alfa Bank, one of Russia's largest banks, controlled by
111 RUSSIA Country Report December 2018 www.intellinews.com