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Kernel plans to construct new seed crushing plant with 1 mmt capacity

Ukraine’s largest sunflower oil producer and grain trader Kernel (KER PW) intends to construct an oilseed plant with crushing capacity of 1 mmt of sunflower seeds per year involving about USD 130 mln in investment. The planned site is located near Kernel’s silo in the Khmelnytskiy region. The low share of sunflower seed in total acreage in western Ukraine, as well as higher sunflower seed yields per ha than the Ukrainian average, show “headroom for future expansion” said Yuriy Pugach, the operations director at Kernel.

 

Andriy Perederey: If such a plan is realized, the company could boost its crushing margin from tapping a new area of sunflower seed suppliers. Due to small competition for seeds in the western region, the company should be able to secure a better-than-average margin at the new plant. If operational, the new plant could earn around USD 80-90 mln of EBITDA per year. All this allows us to remain bullish on Kernel stock.

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