Ovostar revenue rises 12% yoy in 9M17

Net revenue at Ukrainian egg producer Ovostar (OVO PW)
rose 12.1% yoy to USD 60.2 mln in 9M17, according to the company’s interim
report published on Nov. 14. Its export sales improved 42% yoy to USD 27.6 mln,
while revenue from domestic sales decreased 4.8% yoy to USD 32.6 mln. The
company’s key revenue driver was its egg product segment, whose sales increased
19.5% yoy to USD 18.2 mln. The average egg price climbed 8% yoy in local
currency terms to UAH 1.33/egg (a 3.9% yoy rise in USD terms).

The company’s EBITDA decreased 14.1% to USD 12.2 mln
in 9M17 due to higher selling and distribution costs, which swelled 26.5% yoy
(or by USD 0.85 mln). Government subsidies contributed USD 0.01 mln to EBITDA
in 9M17, falling 91% yoy from USD 0.11 mln in 9M17. The company’s net profit
dropped 34.9% yoy to USD 7.9 mln

Andriy Perederey: Ovostar’s 9M17 results were in line with our expectations of a USD 60.0 mln top line and USD 12.1 mln
EBITDA. We see the company’s ability this year to match 2016 results in terms
of annual EBITDA with the help of rising egg prices and margins in the fourth
quarter. But we retain our neutral view on Ovostar stock, which trades at the
highest multiple in the Ukrainian universe (about 8.0x trailing EV/EBITDA).