MHP ramps up poultry deliveries 19% yoy in 9M13

Ukraine’s leading poultry producer MHP (MHPC LI) reported a 17% yoy increase in poultry production (to 122.35 Kt) and 29% yoy growth in chicken sales (to 120.08 Kt) in 3Q13. That resulted in a 18% yoy increase in poultry production (to 346.9 Kt) and 19% yoy increase in chicken sales (to 274.8 Kt) for 9M13. The company increased delivery of chicken for export by 2.6x yoy to 84.8 Kt in 9M13, implying domestic sales remained broadly flat yoy in 9M13. (I replaced all references to chicken meat with "poultry." They are synonyms.) A lack of a seasonal increase in chicken prices this year and a higher share of export deliveries (at a discount to the domestic market) affected MHP’s average chicken prices, which declined 8% yoy (to UAH 16.12/kg) in 3Q13 and 6% yoy (to UAH 16.21/kg) in 9M13. That resulted in an estimated 11% yoy increase in revenue from poultry sales to UAH 5.28 bln in 9M13. The company also reported good results from its sunflower oil sales, with volumes having increased 19% yoy in 9M13 and prices remaining flat yoy (in USD equivalent), which should result in total revenue from oil sales at USD 192 mln. MHP also reported it's going to harvest about 290 Kha of land this year (vs. 250 Kha in 2012) and presented the results of its early crops harvest, with wheat yielding 5.5 t/ha (vs. 5.1 t/ha in 2012) and rapeseed yielding 3.2 t/ha (vs. 3.4t/ha in 2012).

Alexander Paraschiy: Despite lower prices for MHP poultry and grains this year, MHP will still be able to report about a 10% yoy increase in revenue in 2013, we estimate. At the same time, weaker prices will not allow the company to show EBITDA growth this year – the company’s outlook is EBITDA will decline 10%-15% yoy in 2013 (to USD 400-410 mln). Despite the expected decline in profit, we expect MHP will significantly improve its free cash flow in 2013 and 2014: as the company is close to completing its capital-intensive Vinnytsia project, it is expected to decrease its CapEx by up to USD 130 mln yoy in 2013 and by at least USD 100 mln in 2014. That will allow the company to generate enough cash flow to deleverage fast and to pay hefty dividends, we expect. Overall, we see MHP as a good investment opportunity for the next couple of years.

Источник: Конкорд Капитал