MHP poultry sales rise 3.2% yoy in 3Q19

Ukraine’s largest poultry producer MHP (MHPC LI, MHPSA)
sold 166.0 kt of poultry meat in 3Q19, a 3.2% yoy increase (and an 8.4% qoq
decline), according to its Oct. 18 trading update. The gain was driven by local
market sales that advanced 7.9% yoy to 86.8 kt (or a 3.5% qoq) increase) in
3Q19, which was partly offset by export sales falling 3.2% yoy (and 18.7% qoq)
to 79.2 kt. So poultry exports accounted for 48% of total poultry sales in 3Q19
vs. 50% a year ago.

During the quarter, the average selling poultry price
in UAH terms slid 4.5% yoy (or a 3.7% qoq decrease) to UAH 38.6/kg, but rose in
USD terms by 3.4% yoy (or 1.3% qoq) to USD 1.53/kg.

Poultry sales at MHP’s EU-based subsidiary Perutnina
Ptuj increased 0.5% qoq to 15.9 kt in 3Q19 and its average selling price was
EUR 2.63/kg.

In 9M19, MHP’s poultry sales improved 13.8% yoy to
511.2 kt, while the average selling price in UAH terms slid 1.2% yoy to UAH
39.2/kg and slightly rose by 0.96% yoy to USD 1.49/kg in USD terms. Sales
volumes rose due to a 26.1% yoy increase in exports to 269.7 kt in 9M19.

Andriy Perederey: MHP’s qoq decline in poultry sales will be offset by strong
USD-denominated prices with a stable export sales share in 3Q19. And we expect
that the poultry segment will contribute about USD 250 mln of revenue and USD
80 mln of EBITDA in 3Q19. Also, MHP’s stable operating results of its EU-based
facilities will be supportive for the company’s financials in 3Q19. So we
expect the company’s total 2019 EBITDA at about USD 500 mln, or 11% higher yoy.
We remain bullish on MHP stock and neutral on its Eurobonds.