Page 139 - RusRPTApr21

Increase the limit on subsidised short-term loans for producers 50% to RUB1.5bn per borrower, and prolong the subsidised loans for companies affected by avian influenza (up to 12 years).
Introduce a phased increase in the import customs duty rate in order to stimulate the production of hatching eggs: as of 1 January 2022 from 0% to 5%, and after 1 January 2023 to 15%.
Allow the possibility to reimburse capex for constructing and modernising hatching egg production facilities from 2022.
Introduce potential compensation of part of the costs per kg of manufactured and sold products. This decision might be valid until 1 October 2021 for poultry producers that keep their selling prices unchanged.
Poultry prices have grown 10% YTD and are up 33% y/y for the first two months of 2021 (RUB123/kg), driven by increasing commodity prices (particularly grain). As pork prices, which have added 17% YTD and 27% y/y for 2mo21 (RUB96/kg) are inter-dependent with poultry, we assume an incremental weighting on pork prices, given the aforementioned initiatives for the poultry segment to be put in place.
We view the respective measures as an addition to the previously introduced initiatives aimed at stabilizing the pricing environment for agricultural commodities, and food prices overall. The latter measures include retail and wholesale price caps for sugar and sunflower oil through 1Q21, while the grain market saw quota and various tariffs effective from 15 February.
In our Rusagro model, we see pork output up 13% y/y to 323,000t in 2021F while the prices for live pork are to add 3% y/y to RUB82/kg. This segment is to account for 19% of consolidated revenues and 22% of EBITDA for this year, in our view. The company estimates the downside risks of the sugar and oil price capping initiatives, which have already been implemented, at 4.3% of our 2021F EBITDA forecast, while pressure on pork prices could potentially increase that amount.
Rusagro’s GDRs have gained 31% in the last three months, reflecting upbeat operations, and now demand 2021F EV/EBITDA of 5.2x, which we see as appealing.
We forecast 2020F EBITDA to rise 65% y/y to RUB33bn and be sustainable in 2021F.
The Ministry of Agriculture has proposed a mechanism to subsidise the costs associated with producing and selling bottled sunflower oil. The
139 RUSSIA Country Report April 2021 www.intellinews.com