Ovostar hints at strong 3Q13 results

Ukrainian egg producer Ovostar Union (OVO PW) revealed in its September 16 presentation some preliminary operating figures for 3Q13 that hint it will report significant increase in its revenue and profitability for the quarter. In particular, Ovostar reported a 32% yoy increase in egg production to 650 mln units in 9M13, as well a 36% yoy rise in dry egg output to 4,900 tons. The company also reported 46% yoy growth in sunflower seed processing to 12.5 kt and 16% yoy growth in shell egg processing to 205 mln units in 9M13.



The figures indicate the company increased egg production to 228 mln units in 3Q13, 37% higher yoy and 10% higher qoq. Its production of dry liquid egg products increased 21% yoy, while output of dry egg products declined 21% yoy in 3Q13.



Ovostar also stressed the significant improvement in average egg prices, which were 1.3x better qoq and 1.4x better yoy in 3Q13. At the same time, fodder prices were about 10% less qoq. The company also reported it expects 9M13 revenue of USD 50 to 55 mln (up 26-36% yoy). It also presented its CapEx program for 2014-2016, which aims to invest USD 90 mln and increase shell egg production to 2.1 bln units in 2017 vs. 0.72 bln in 2012.



Alexander Paraschiy: With the outlined numbers for 9M13, we expect the company will report about USD 52 mln in revenue in 9M13, as well as improve its EBITDA margin to about 32% for the period vs. 29% reported for 1H13.



The figures also confirm that Ovostar has delivered on all the plans it declared before its IPO two years ago, and we believe the market will reward the company’s new growth plan, however ambitious it looks. The company’s low leverage (end-1H13 net debt was USD 2.5 mln, which was 0.1x of 2012 EBITDA) hints the company will look actively for debt financing to complete its new CapEx program.

Источник: Конкорд Капитал