Cost efficiency
To compensate for the obvious fact that higher yields could be achieved simply by higher costs applied to the land (as we find in the case of Agroton and MHP), we also compare companies` costs per ha vs. the Ukrainian average, taken from State Statistics Committee of Ukraine for 2010, and average among listed companies for 2011.
As companies do not report costs for all cultures, we focus on key crops for companies, weighting them according to their importance. For companies whose costs exceed the average, we apply discounts of up to 20%, for those below – premiums of up to 20%.
Premium/discount due to cost efficiency |
|
Source: Concorde Capital estimates |
Costs, USD/ha Corn |
|
Wheat |
|
|
|
Sunflower |
|
Sugar beets |
|
|
|
Source: Company data |
||
Adding supplementary businesses
To arrive at the fair value for listed Ukrainian companies, we add the value of supplementary and non-core businesses. For most companies, this is a grain storage business, which we value at:
USD 100/kt for silos built during Soviet times
USD 200/kt (or construction costs) for new silos
USD 50/kt for granaries
USD 200/kt for potato storage
For companies involved in livestock and food processing, we value those businesses based on an EV/EBITDA multiple of 6.0x, the average for Ukrainian consumer goods companies.
Valuation summary for other assets
|
Business overview |
Capacity, kt |
Est. EBITDA 2012, USD mln |
Multiple |
Est. value, USD mln |
|
|
|
|
|
|
Agroton |
Owned grain silos |
105 |
x |
USD 100/t |
11 |
|
Leased grain silos |
180 |
x |
USD 50/t |
9 |
|
Food processing |
|
0 |
6x |
0 |
|
Livestock |
|
1.6 |
6x |
10 |
|
Total |
|
|
|
29 |
Industrial Milk Company |
Grain silos |
257 |
x |
USD 100/t |
26 |
|
Grain granaries |
46 |
x |
USD 50/t |
2 |
|
Potato storage |
13 |
x |
USD 200/t |
3 |
|
Livestock |
|
4 |
6x |
24 |
|
Total |
|
|
|
55 |
KSG Agro |
Food processing |
|
0 |
6x |
0 |
|
Pork production |
|
1 |
6x |
6 |
|
Pellets production (60-90 kt capacity) |
|
2 |
6x |
12 |
|
Grain granaries |
16 |
|
USD 50/t |
1 |
|
Total |
|
|
|
19 |
MCB Agricole |
n/a |
|
|
|
0 |
Mriya |
Greenfield grain silos |
160 |
x |
USD 200/t |
32 |
|
Granaries |
250 |
x |
USD 50/t |
13 |
|
Greenfield seed silo |
60 |
x |
USD 600/t |
36 |
|
Potato storages |
56 |
x |
USD 200/t |
11 |
|
Total |
|
|
|
92 |
Sintal |
Owned grain silo |
100 |
x |
USD 100/t |
10 |
|
Total |
|
|
|
10 |
Source: Company data, Concorde Capital calculations
Summing up landbank value derived from company-specific target EV/ha with our estimates for the value of complementary and non-core assets, we arrive at sum-of-the parts implied values.
Asset-based valuation summary
|
Target EV/ha, USD |
Landbank, ths ha |
EV, landbank, USD mln |
EV, other assets, USD mln |
EV, asset-based, USD mln |
Agroton |
1,098 |
171 |
188 |
29 |
217 |
Industrial Milk Company |
2,215 |
83 |
183 |
55 |
238 |
KSG Agro |
1,830 |
59 |
109 |
19 |
127 |
MCB Agricole |
1,613 |
90 |
145 |
0 |
145 |
Mriya |
2,118 |
295 |
625 |
92 |
717 |
Sintal |
989 |
145 |
143 |
10 |
153 |
Source: Concorde Capital
DCF
We apply a 50% weight to DCF valuation to determine our target prices for most of the companies covered in this report (MCB Agricole and Agroton targets are fully based on DCF). Company-specific DCF outputs are given in the company profiles section of this report.
DCF valuation summary
Company name |
Implied EV
|
Implied equity value |
Implied share price
|
Current price |
|
|
USD mln |
USD mln |
USD |
listing currency |
listing currency |
Agroton |
xx.x |
xx.x |
xx.x |
xx.x |
xx.x |
Industrial Milk Company |
xx.x |
xx.x |
xx.x |
xx.x |
xx.x |
KSG Agro |
xx.x |
xx.x |
xx.x |
xx.x |
xx.x |
MCB Agricole |
xx.x |
xx.x |
xx.x |
xx.x |
xx.x |
Mriya |
xx.x |
xx.x |
xx.x |
xx.x |
xx.x |
Sintal Agriculture |
xx.x |
xx.x |
xx.x |
xx.x |
xx.x |
Source: Concorde Capital