Page 127 - RusRPTNov21

lower than the available grain volumes, fairly reflecting the domestic supply-balance (as in the last two farming years). Those measures bring stabilisation to domestic prices and also create the grounds for a further consolidation of the export trade. For this season, the tightening regulatory regime is likely to be in place, while it remains unclear whether it could be cancelled over the short term.
Souzrossakhar, the leading sugar union, anticipates that the planting area of beet is going to decline next year due to the 19% surge in the production costs for farmers to RUB125k/ha. The current season (September/August) has seen an expansion in the beet planting are of 8.5% to 1mn ha, while sugar refining is to recover 10% y/y to 5.8mn tonnes, according to the union. The refining figure broadly matches consumption in Russia (5.6mn tonnes this season) while sugar stocks have been declining due to the undersupply in the previous farming year (5.3mn tonnes and 5.8mn tonnes, respectively). As a result, we anticipate a still stretched supply-demand balance in the short term. Sugar prices were up 65% y/y in 9mo21 and have not seen limitations lately, as the pricing caps were lifted from 1 June, while producers have voluntarily agreed to cap prices until the end of September. The planting campaign for beet takes place in the spring and so the outlook is still vague, in our view. However, the aforementioned market balance and potentially lower beet area could cause upward pressure on prices, with incremental support for Rusagro’s financials. For 2021F, we model a 32% y/y surge in EBITDA to a record RUB42bn and consider next season’s EV/EBITDA of 6.0x and 12-month dividend yield of 10% as appealing.
127 RUSSIA Country Report November 2021 www.intellinews.com