Key metrics
Landbank size, ths ha (current and harvested in 2011) |
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Storage capacity, kt |
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Source: Company data |
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Source: Company data |
Crop structure (corn, other grains, oilseeds, other), 2011 |
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Crop yields, 2010-11 average |
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Source: Company data |
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Source: Company data |
MCap, USD mln lhs and ADT, USD ths rhs |
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EV/ha, USD |
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Source: Bloomberg |
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Source: Company data, Bloomberg, Concorde Capital |
Per ha comparison
Harvest value and production costs, 2011 |
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Adjusted EBITDA, USD/ha |
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Note: Harvest value is calculated as crop sales plus the book value of agricultural produce at yearend minus the book value of agricultural produce at year start. For Kernel and Astarta, sugar beet value is estimated at the same prices as Mriya reports, for comparison purposes. Based on harvested landbank size. Source: Company data, Concorde Capital calculations |
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Note: EBITDA figures adjusted for the revaluation of biological assets. See Appendix T for details on methodology. Based on harvested area. Source: Company data, Concorde Capital |
Total assets, USD/ha |
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PP&E, USD/ha |
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Note: Based on landbank size at yearend and total assets attributable to the agricultural segment. Source: Company data, Concorde Capital |
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Note: Based on landbank size at yearend Source: Company data, Concorde Capital
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Working capital, USD/ha, eop |
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Current biological assets, USD/ha of winter sowings, eop |
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Note: Based on landbank size at yearend Source: Company data, Concorde Capital |
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Note: Based on land under winter crops at yearend Source: Company data, Concorde Capital |
Management credibility
The high dispersion in the production processes of Ukrainian farmers over both space and time makes it impossible to check key operating data, yields and costs applied. This increases investors` (and auditors) reliance on figures provided by management and thus makes credibility a critical issue.
We attempt to assess management credibility by evaluating several key issues related to disclosure, its timing and consistency.
Qualitative characteristics of management credibility |
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Agroton |
IMC |
KSG Agro |
Mriya |
MCB Agricole |
Sintal |
Astarta |
kernel |
MHP |
Negative indicators |
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Management uses biological asset revaluation aggressively, boosting accounting EBITDA figures |
no |
yes |
yes |
yes |
yes |
yes |
no |
no |
yes** |
Management provides guidance including on biological revaluation* |
no |
yes |
yes |
no |
no |
no |
no |
n/a** |
yes** |
Non-acquisition CapEx is significant and not disclosed/executed according to plan |
yes |
no |
no |
yes |
no |
no |
no |
no |
no |
Frequent and significant PP&E revaluation |
no |
no |
no |
yes |
no |
no |
no |
no |
no |
Selling prices are not transparent – either from sales to related parties or unclear premiums/discounts to Ukraine’s averages |
no |
no |
no |
yes |
yes |
yes |
no |
no |
no |
Responses to IR requests take more than a week |
yes |
yes |
yes |
no |
yes |
yes |
no |
no |
no |
Sales to related parties are significant |
no |
no |
no |
yes |
no |
no |
no |
no |
no |
Qualifications by/outstanding issues with auditors |
yes |
no |
yes |
no |
no |
yes |
no |
no |
no |
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Positive indicators |
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Both revenues and COGS sides of biological revaluation are disclosed in audited financial statements |
yes |
no |
no |
no |
yes |
yes |
yes |
yes |
yes |
Both revenues and COGS sides of biological revaluation are disclosed on request |
yes |
no |
yes |
yes |
yes |
yes |
yes |
yes |
yes |
Audited financials are reported within the first four months of the year |
yes |
yes |
no |
yes |
no |
no |
yes |
yes |
yes |
Key operating data is reported transparently and consistently: yields and costs per ha |
no |
no |
no |
yes |
no |
yes |
yes |
yes |
no |
Landbank acquisition costs are reported with a breakdown to landlease rights and other assets |
no |
no |
no |
yes |
n/a |
yes |
no |
yes |
no |
Growth strategy is consistent |
no |
yes |
no |
yes |
yes |
no |
yes |
yes |
yes |
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Sum of negative scores |
6 |
7 |
9 |
6 |
5 |
6 |
1 |
0 |
4 |
* Which implies management is not only forecasting such parameters as weather conditions but also forecasts the amount of future revaluations
** Farming makes up a relatively small share of the business thus the overall contribution of biological revaluation is less important
Source: Concorde Capital
Our general impression is that processors (Astarta, Kernel, MHP) provide a better level of management credibility than pure farmers. Among pure farmers, we found all companies expect Industrial Milk Company and Sintal Agriculture to have critical concerns from a minority shareholder’s perspective.
Critical concerns from the minority shareholder point of view
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Key concerns |
Agroton |
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KSG Agro |
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Mriya |
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MCB Agricole |
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Source: Concorde Capital