Agroton increases EBITDA 30% in 1H18

Farming company Agroton posted USD 16.62 mln net revenue
in 1H18 (flat yoy) in its Aug. 31 filing. Its EBITDA improved 30% yoy to USD
5.77 mln, fueled mostly by 11% higher gain from the revaluation of agricultural
produce and biological assets. Loans receivable of USD 20.79 mln (up 5.4% YTD)
remained the biggest asset item of the company, generating USD 1.44 mln
interest income for Agroton in 1H18 (up 17% yoy). This, as well as USD 4.81 mln
in profit from foreign exchange difference, allowed the company to increase net
profit 61% yoy to USD 6.03 mln in 1H18. Its end-1H18 cash of USD 17.78 mln
exceeded total debt of USD 7.85 mln.

Alexander Paraschiy: Agroton’s EV/EBITDA multiple of 1.1x promises a potential for an
equity price increase in the short-term. However, due to the company’s poor
corporate governance, we see the upside potential is limited. The company
remains cash-rich and profitable, but distributes nothing to minority
shareholders. Its high level of lending to related parties is a reason to worry
about its sustainability.