- •Investment Case 11
- •Valuation summary 37
- •Investment case 53
- •Investment Case
- •Companies Compared Stock data
- •Key metrics
- •Per ha comparison
- •Management credibility
- •Market Overview Summary
- •Ukraine in global context Ukraine produces 2-3% of world soft commodities
- •Sunflower oil, corn, wheat, barley and rapeseed are Ukraine’s key soft commodities to export
- •Ukraine is 8th in arable land globally
- •Key inputs used in crop farming Ukraine`s climate favorable for low-cost agriculture
- •Soil fertility map
- •Machinery use far below developed countries
- •Land trade moratorium makes more benefits
- •Fertilizer use
- •Inputs prices: lease cost is Ukraine’s key cost advantage
- •Case study: Production costs in Ukraine vs. Brazil for corn and soybean
- •Farming Efficiency Ukrainian crop yields lag the eu and us, on par with Argentina and Brazil, above Russia’s
- •5Y average yields, t/ha and their respective 10y cagRs
- •Yields at a premium in Ukraine on the company level
- •Growth Growth should come from yield improvement, crop structure reshuffle and acreage increase
- •Crop structure is gradually shifting to more profitable cultures
- •Combined crop structure of listed companies
- •Ukraine`s 2012 harvest outlook
- •Valuation
- •Valuation summary
- •Valuation summary
- •Asset-based approach
- •Asset-based valuation
- •Valuation premium/discount summary
- •Location matters: Value of land by region
- •Yields efficiency comparing to benchmark region
- •Cost efficiency
- •Adding supplementary businesses
- •Valuation summary for other assets
- •Cost of equity assumptions
- •Model assumptions
- •Landbank growth capped at 30%
- •Crop structure
- •Biological revaluation (ias 41) excluded
- •Land ownership
- •Company Profiles Agroton a high cost producer
- •Investment case
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Agroton in six charts
- •Operati
- •Industrial Milk Company Corn story
- •Investment case
- •A focus on the corn explains high margins
- •Location favourable for corn
- •Well on track with ipo proceeds
- •Weak ebitda margin in 2012 explained by non-cash items
- •Valuation
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Ksg Agro On the road to space/Not ready to be public
- •Investment Case
- •A 5x yoy boost in total assets looks strange to us
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Ksg Agro in six charts
- •Mcb Agricole Acquisition target with lack of positives for minorities
- •Investment Case
- •Inventories balance, usd mln
- •Overview of acquisitions of public farming companies in Ukraine
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement, usd mln
- •Mcb Agricole in six charts
- •Mriya Too sweet to be true
- •Investment Case
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Mriya in six charts
- •Sintal Agriculture
- •Investment Case
- •25% Yoy cost reduction in 2011 should improve margins
- •Irrigation is a growth option
- •Inventory balance, usd mln
- •Valuation
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Sintal Agriculture in six charts
- •Astarta Sugar maker
- •Kernel Grain trader actively integrating upstream
- •Poultry producer
- •Appendices Land value
- •Current landowner income capitalization model
- •Farmer income capitalization model
- •Normative value
- •Biological asset revaluation
- •How do we adjust the income statement to be on a cost basis?
- •Ias 41 application summary
- •Appendix: Crop production schedule Crop schedule, based on 2012 harvesting year
- •Investment ratings
- •Contacts
Valuation premium/discount summary
|
Criterion |
Description (BRAD, PLEASE MAKE TEXT IN THIS COLUMN SHORTER) |
Max discount |
Max premium |
Location |
(1) Location profitability |
We use region’s average yields and prices provided by APK-inform to calculate revenue side and Ukraine’s average figures, on average profit per ha, and then we weight figures according to region`s crop structure. |
-37% |
54% |
|
See Appendix X for assumed premiums for each region |
|||
(2) Yield stability in region |
For every region the coefficient of variation is calculated for five year dataset of yields for each crop. Weighted by crop share in crop structure. Bottom quartile is granted with 10% premium for yields stability, up quartile with 10% discount for instability. |
-10% |
+1% |
|
(3) Weather diversification |
+10% premium if significant share of company`s land is located in at least two regions with different weather patterns. |
0% |
+10% |
|
(4) Company cluster size |
-25% discount to the land which is less than in 5 ths ha clusters or fallow. |
-6% |
0% |
|
Efficiency |
(5) Company’s yields compared to region’s average |
Three years average yields premium to regions average is calculated, then weighted by regions where company operates and crop share in land planted. |
-5% |
+37% |
(6) Company’s costs per ha compared to Ukraine’s average |
We compare costs per ha for key crops with Ukraine’s average figures for 2010.Weighted by crop importance. Maximum discount and premium at 20%. |
-20% |
+20% |
Source: Concorde Capital
Below is a detailed breakdown of the premiums & discounts we applied to each company.
Premiums/discounts by company
|
Weighted avg location-based, USD/ha* |
Yield stability |
Weather diversification |
Low cluster size |
Total location premium to UA avg |
Yield efficiency* |
Cost efficiency* |
Total weighted efficiency premium |
Target EV, USD/ha |
|
(1) |
(2) |
(3) |
(4) |
(I) = (1)*(2)*(3)*(4)/ USD 1,600-1 |
(5) |
(6) |
(II) = (5)*(6) |
$1,600* (1+(I))*(1+(II)) |
Agroton |
808 |
0% |
0% |
0% |
-33% |
27% |
-20% |
2% |
823 |
IMC |
1,401 |
0% |
0% |
0% |
17% |
25% |
-5% |
19% |
1,661 |
KSG Agro |
1,226 |
-10% |
0% |
-3% |
-10% |
6% |
20% |
28% |
1,373 |
MCB Agricole |
1,135 |
-3% |
10% |
-6% |
-4% |
0% |
0% |
0% |
- |
Mriya |
1,240 |
1% |
0% |
0% |
4% |
11% |
15% |
27% |
1,589 |
Sintal |
753 |
-10% |
10% |
0% |
-38% |
5% |
0% |
5% |
781 |
|
|
|
|
|
|
|
|
|
|
Astarta |
1,849 |
0% |
10% |
0% |
70% |
22% |
-10% |
9% |
2,225 |
Kernel |
1,716 |
-2% |
10% |
-1% |
52% |
-5% |
-10% |
-15% |
1,560 |
MHP |
- |
0% |
10% |
0% |
0% |
0% |
0% |
0% |
- |
* See pages TT-TT for details
Source: Concorde Capital estimates
The subsequent pages discuss in detail base EV/ha per region, and the yield and cost efficiency premiums.