Astarta increases sugar output 50% in 2021

Ukraine’s leading sugar producer and farmer Astarta
(AST PW) increased sugar beet processing by 18% to 1,844 kt in 2021, the
company reported on Dec. 23 following the completion of its beet processing
season. It increased the production of beet sugar 18% yoy to 266 kt, implying a
sugar yield of 14.4% in 2021 (down from 14.5% in last year). At the same time,
Astarta decreased its use of natural gas per ton of sugar beet processed 6% yoy
to about 22.1 cubic meters. The company’s total sugar production in 2021 reached
339 kt (including that produced from imported sugar cane), or 50% more yoy.

The company’s harvest of sugar beets increased 7% yoy
to 1,584 kt and harvest yield increased 10% yoy to 47.4 t/ha. Yields of key
grains and oilseeds (corn, wheat, soybeans, sunflower and rapeseeds) increased
20%-30% yoy (about 24%, on average) resulting in their total harvest of 970 kt,
which is up 21% yoy. In particular, its corn harvest reached 508 kt and corn
yield increased 25% to 8.6 t/ha in 2021.

Alexander Paraschiy: The
company’s farming results look encouraging, while the key question remains how
high natural gas prices could have affected costs of its beet sugar production.
Taking into account high sugar prices in Ukraine (which are about 60% higher
yoy in dollar terms), we see that the company will be able to pass increased
sugar production costs to consumers, at least so far.

We confirm our wide range of Astarta’s 2021 EBITDA
estimate of EUR 150-195 mln and continue to see AST PW shares as undervalued,
as the market price implies a leading EV/EBITDA multiple of 1.9x-2.4x.