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Ovostar reports strong output and pricing growth in 3Q13

Ovostar reports strong output and pricing growth in 3Q13

23 October 2013

Egg producer Ovostar Union (OVO PW) reported it ramped up its egg production 32% yoy to 648 mln units in 9M13. The boost was the result of a 41% yoy increase in its laying hen flock to 3.74 mln as of end-September. The company improved its sales of shell eggs 26% yoy to 410 mln units, sales of dry egg products 54% yoy to 1,132 t and sales of liquid egg products 42% yoy to 4,992 t in 9M13. Average prices of shell eggs advanced 3% yoy to UAH 0.651 per piece, prices of dry egg products improved 6% yoy to UAH 44.74/kg and prices of liquid egg products remained flat yoy in 9M13.

 

Alexander Paraschiy: The 9M13 results imply Ovostar increased sales of shell eggs 53% yoy to 153 mln units in 3Q13. What’s more impressive, the average price of a shell egg increased 27% yoy to UAH 0.74 in 3Q. Just an increase in volume and price alone will enable Ovostar to report profit before tax in its shell eggs segment at USD 6.0 mln, or 20% higher than for the first two quarters of the year. Average price declines in 3Q13 of 15-20% qoq for soft commodities (the key cost items for Ovostar) will add even more to its 3Q profit. All this indicates that Ovostar will report an exceptionally strong bottom line for the third quarter. Therefore, we remain bullish on Ovostar stock.

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