- •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
Our DCF valuation of Mriya yields a fair price of USD 6.7 per GDR (EUR 5.3). For detailed operating assumptions, please refer to the next page.
DCF output, USD mln
|
2012E |
2013E |
2014E |
2015E |
2016E |
2017E |
2018E |
2019E |
2020E |
2021E |
|||||
EBITDA |
142 |
165 |
189 |
215 |
228 |
240 |
251 |
262 |
275 |
287 |
|||||
EBIT |
119 |
137 |
158 |
184 |
197 |
207 |
218 |
228 |
240 |
251 |
|||||
Effective Tax Rate |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
|||||
Taxed EBIT |
116 |
134 |
155 |
180 |
193 |
203 |
213 |
224 |
235 |
246 |
|||||
Plus D&A |
23 |
28 |
30 |
31 |
32 |
32 |
33 |
34 |
35 |
36 |
|||||
Less CapEx |
(168) |
(169) |
(79) |
(33) |
(34) |
(35) |
(35) |
(41) |
(43) |
(43) |
|||||
Less change in OWC |
(2) |
(33) |
(31) |
(36) |
(17) |
(13) |
(13) |
(13) |
(14) |
(14) |
|||||
FCFF |
- |
(40) |
76 |
142 |
174 |
188 |
198 |
204 |
214 |
225 |
|||||
WACC |
17% |
17% |
17% |
17% |
17% |
18% |
18% |
18% |
18% |
18% |
|||||
Sum of disct'd CF's |
|
585 |
|
|
|
|
|
|
|
|
|||||
Terminal Value |
|
|
|
|
|
|
|
|
|
1,584 |
|||||
Disct'd TV |
|
394 |
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Firm value |
|
979 |
|
|
Portion due to TV |
|
|
40.3% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Less Net Debt |
|
(264) |
|
|
|
|
|
|
|
|
|||||
Equity Value as of 25 May 2013 |
716 |
|
|
Implied exit EBITDA Multiple |
|
5.5 x |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Perpetuity Growth Rate |
|
|
|
|
|
|
|
|
|
3.0% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Fair price of GDR |
|
USD 6.7 |
|
|
|
|
|
||||||||
|
|
EUR 5.3* |
|
|
|
|
|
||||||||
* At USD/EUR rate of 1.26 as of May 23
Source: Concorde Capital estimates
Sensitivity analysis, EUR per GDR
|
Perpetuity Growth Rate |
|
|
Exit Multiple (EBITDA) |
|||||||||
|
2.0% |
2.5% |
3.0% |
3.5% |
4.0% |
|
|
3.5 x |
4.5 x |
5.5 x |
6.5 x |
7.5 x |
|
WACC |
|
|
|
|
|
|
WACC |
|
|
|
|
|
|
-3.0% |
6.4 |
6.6 |
6.7 |
6.8 |
7.0 |
|
-3.0% |
5.4 |
6.0 |
6.7 |
7.4 |
8.0 |
|
-2.0% |
6.0 |
6.1 |
6.2 |
6.4 |
6.5 |
|
-2.0% |
5.0 |
5.6 |
6.2 |
6.8 |
7.5 |
|
-1.0% |
5.5 |
5.6 |
5.8 |
5.9 |
6.0 |
|
-1.0% |
4.6 |
5.2 |
5.8 |
6.3 |
6.9 |
|
+0.0% |
5.1 |
5.2 |
5.3 |
5.5 |
5.6 |
|
+0.0% |
4.3 |
4.8 |
5.3 |
5.9 |
6.4 |
|
+1.0% |
4.8 |
4.9 |
5.0 |
5.1 |
5.2 |
|
+1.0% |
4.0 |
4.5 |
5.0 |
5.5 |
6.0 |
|
+2.0% |
4.4 |
4.5 |
4.6 |
4.7 |
4.8 |
|
+2.0% |
3.7 |
4.1 |
4.6 |
5.1 |
5.5 |
|
+3.0% |
4.1 |
4.2 |
4.3 |
4.4 |
4.5 |
|
+3.0% |
3.4 |
3.8 |
4.3 |
4.7 |
5.1 |
|
Source: Concorde Capital estimates
WACC decomposition
|
2011E |
2012E |
2013E |
2014E |
2015E |
2016E |
2017E |
2018E |
2019E |
2020E |
Debt-to-Equity |
0.46 |
0.45 |
0.46 |
0.49 |
0.50 |
0.50 |
0.50 |
0.49 |
0.50 |
0.50 |
Avg. after-tax Interest Rate |
11.7% |
12.1% |
12.3% |
12.4% |
12.5% |
13.0% |
13.0% |
13.0% |
13.1% |
13.1% |
Ukr. Eurobonds YTM |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
Equity premium |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
Comp.-specif. prem. |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
Cost of Equity |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
WACC |
17.3% |
17.5% |
17.5% |
17.4% |
17.4% |
17.6% |
17.6% |
17.6% |
17.6% |
17.6% |
WACC to Perpetuity |
17.6% |
|
|
|
|
|
|
|
|
|
Source: Company data, Concorde Capital estimates