Ovostar boosts egg production 12% in 2017

Ukrainian egg producer Ovostar (OVO PW) boosted its
egg production by 12.2% yoy to 1.66 bln units in 2017, according to its Jan. 25
operating update. The company’s laying hen flock rose 1.2% yoy to 6.62 mln
heads. Ovostar sold 1.20 bln shell eggs (a 13.4% yoy increase) and boosted its
export sales 72.3% yoy to 0.53 bln units, while its domestic sales dropped
10.8% yoy to 0.67 mln units in 2017. Its average shell egg price improved 13.7%
yoy to UAH 1.53 in 2017.

The results imply that in 4Q17 alone, Ovostar sold 377
mln shell eggs (a 27% yoy rise and 18% qoq) at an average price of UAH 1.99 per
unit (a 20% yoy increase and 44% qoq).

In 2017, Ovostar processed 541 mln eggs. The company’s
sales of liquid egg products improved 32% yoy to 11.5 kt, while export sales
surged 2.3x yoy to 5.0 kt. The company’s sales of dry egg product jumped 55%
yoy to 3.3 kt, while export sales volumes swelled 80% yoy to 2.4 kt. The
average selling price for liquid egg products rose 13.7% yoy to UAH 1.53/kg and
for dry egg products dropped 5% yoy to UAH 115.4/kg.

Andriy Perederey: With its boosted sales volumes and higher egg prices, we see the
company’s top line close to USD 100 mln in 2017, or a 29% yoy advance. Also, we
see the company’s 2017 EBITDA to exceed last year’s level of USD 24.1 mln,
which will have been a significant improvement compared to a 14% yoy EBITDA
decline in 9M17. Such results should be rewarded by the stock market, in our
view.