MHP boosts value of poultry sold 23% yoy in 9M17

Poultry sales at Ukraine’s leading poultry producer MHP
(MHPC LI, MHPSA) slid 13% yoy in 3Q17 to 134.9 kt, according to its Oct. 18
trading update. It attributed the smaller sales to lower stock at the beginning
of the quarter of 21.0 kt, or 55% less yoy. The company’s production facilities
were operational at nearly full capacity, and it produced 137.0 kt of poultry
during the quarter (2% less yoy). Its average poultry price was USD 1.46/kg in
3Q17, which is 32% higher yoy and 18% higher compared to 2Q17. This implies
MHP’s revenue from poultry sales increased 15% yoy to about USD 197 mln in
3Q17.

In 9M17, the company sold 419.1 kt of poultry (a 4%
yoy increase) and enjoyed an average price of USD 1.29/kt (a 19% yoy rise),
implying it boosted poultry sales 23% yoy to about USD 541 mln. Export
deliveries accounted for 42% of MHP’s volumes in 9M17, up from 35% a year
before.

MHP also updated investors on the interim results of
its late crop harvest, estimating its corn yields will reach 8.0 t/ha this year
(a 7% yoy drop) and sunflower yields will reach 3.2 t/ha (nearly flat yoy).

Alexander Paraschiy: The significant increase in MHP’s poultry prices, in both local
currency and USD terms, will be the key driver of its bottom line growth in
2017. Some negative surprises could come from MHP’s farming segment, where the
yields of key crops (corn, sunflower) are smaller yoy. Nevertheless, we are
upgrading our forecast of MHP’s 2017 EBITDA to USD 460-470 mln from the previous range of USD 440 – 450 mln. We remain bullish on MHP stock and neutral on its
Eurobonds.