Avangard reports 9M10 trading update

Avangard Holding (LSE: AVGR LI) reported its 9M10 operating results this morning, although it did not provide comparative figures for the same period in 2009. The company’s total shell egg output reached 2.97 bln pieces, while external shell eggs sales comprised 2.67 bln pieces. The average 9M10 shell egg price was UAH 0.48 (ex-VAT), an 8% decrease vs. the 6M10 price reported earlier. In its egg product segment, Avangard processed 0.57 bln eggs over the period, while its average price comprised USD 6.81/kg (ex-VAT) or +0.4% vs. the 6M average price. Ruslan Patlavskyy: According to our estimates, the company’s 9M10 production figures reflect a 17% y-o-y increase in total shell egg production, as well as 12% y-o-y growth in third party shell egg sales. Given the weak reported shell eggs price dynamics, despite ~80% y-o-y grain price growth in 3Q10, we are skeptical of the company’s plans to achieve USD 430 mln (+31% yoy) in sales for 2010 and plan to review our forecasts for possible downgrade.