Page 152 - RusRPTDec21

Rusagro’s GDRs have surged 53% YTD, reflecting the company’s strong operational and financial results, and the decent outlook for the new season. We keep our financial forecasts intact, as the company’s medium-term targets correspond to our volume trajectory. We consider the 2022F multiple of 5.9x EV/EBITDA and 10% dividend yield as appealing.
Rusagro has announced that Timur Lipatov is to start in the CEO role from 1 January 2022. After leading the company for twelve years, Maxim Basov leaves the position but is to remain on the BoD, with an 8% stake in the company’s share capital.
Lipatov brings vast senior management experience from the utilities and power generation sectors (Power Machines, InterRao, Unipro, OGK-3), with a record of successful large-scale capex cycles. We see the near-term focus being on operational efficiency after the rapid growth, the digital transformation, and a less-centralised management structure. Growth has been the company’s prime objective, and aggressive long-term projects could come from sizable M&As, expansion of the Far East project, new export destinations, and the potential creation of the asset base abroad. The stock is appealing to us (12-m TP of USD 18; ETR of 31%; Buy), and trades at an undemanding 5.7x 2022F EV/EBITDA and an annualised DY of 11%, we estimate.
Notable legacy. Maxim Basov became Rusagro’s CEO in 2009 and since then has led company’s volume and operational breakthrough. During his tenure, turnover surged 9x (we forecast it at RUB 226bn in 2021F), Rusagro went public, and conducted number of successful acquisitions to become the leading agricultural conglomerate in Russia. Basov had a wide range of responsibilities, ranging from operational management to capital allocation and strategy, while also being key to promoting the investment case to investors. He controls 8% of the share capital, and is to stay on the BoD.
New prospects. Vadim Moshkovich (57% in the share capital) mentioned a focus on operational efficiency as being among the main short-term objectives for the new CEO, who has been an employee of the company from September. We note that Rusagro has recently integrated sizable assets in the vegetable oil and sugar segments and cost management has potential for optimisation. The capex-heavy period finishes next year, with 2021-22F investment of RUB 35bn and the launch of the project in the Russian Far East. Rusagro presented its strategy this year, and we do not anticipate immediate adjustments, while our revenues surge 1.7x by 2025F. Rusagro has consistently been focused on organic growth, and we see the new CEO’s experience as a good fit for longer-term new large-scale projects.
152 RUSSIA Country Report December 2021 www.intellinews.com