Page 133 - RusRPTOct21

15. As followed by bne IntelliNews, Rusagro posted a 59% year-on-year gain in Ebitda to RUB11bn ($150mn) for 1H21 under IFRS, making a 20% margin. The company paid a generous surprise dividend on its 1H21 results and its investment case continues toe seen as strong. Regarding the organic growth, in the medium term the management plans to increase production volumes in eachusiness segment. This includes expanding its arable land to up to 1mn hectares (78% above the 2020 level) and increasing annual pork production to 400,000 tonnes (up 30% from the 2020 level) through the ramp-up of its projects in the Tambov and Primorsk regions. The company also aims to expand into high-potential export markets with pork, grains and oil and fats products, with a priority on increasing its presence in the Chinese market, as previously reported bne IntelliNews. In a separate announcement, the board of directors (BoD) announced a rise in the minimum level for dividend payments from 25% to 50% of net income, Sberbank notes, while adding that historically the company has paid above the minimum level.
Rusagro has signed an agreement with Chinese retail chain Hema (ownedy Alibaba). The company is to supply sunflower oil under its Leto Krasno mark, toe sold across China though Hema’s online application and own specialised online shop, opened at JD.com.
Rusagro's oil & fats segment is its primary business line, providing 60% of sales and 35% of EBITDA (both as of 1H21). Sunflower oil consumption in China is set to grow 17% y/y, to 2.8mnt in 2021, according to USDA estimates. As the second largest sunflower
market, in terms of consumption, China also has strong growth prospects, implying a 16% CAGR over the last five years vs. thelended 3% for the other top ten countries. Rusagro would also be able to establish relationships with the local authorities, which mighteeneficial for the company’s pork project in the Russian Far East, as well as for other possible future operations in China. The project is to bring 75,000 additional tonnes of pork supply in live weight (25% more capacity in our model) upon its full completion.
Rusagro’s GDR is up 44% YTD; they demand a new season EV/EBITDA of 5.3x and offer a 12-mo dividend yield of 11%, which we see as one of the most appealing profiles in our consumer coverage. In our view, the company is efficiently adjusting to the changed export regimes across its key commodities and fully capitalising on the recent acquisitions in vegetable oil and sugar.
Russian agricultural business Rusagro launched a new feed production complex for Rusagro-Primorye in Mikhaylovsky District (Primorsky Krai) on September 3, as part of a programme to increase pork production to meet domestic demand.
133 RUSSIA Country Report October 2021 www.intellinews.com