Astarta releases encouraging interim crop results

Ukraine’s farmer and leading sugar producer Astarta (AST PW) reported on Oct. 19 its intention to sow 55,000 ha with winter crops this season, compared to 56,000 ha sowed last year. It has sowed already 90% of its targeted area and considers weather conditions to be favorable for the crops.

Astarta also updated on the harvesting results of its oil crops, with 91 kt of soybeans (-32% yoy, we estimate) and 73 kt of sunflower seeds (+13% yoy, we estimate) harvested. The average yield of soybeans this year was 2.2 t/ha (up from 2.1 t/ha last year) and the yield of sunflower seeds was 2.6 t/ha (down from 2.8 t/ha last year). Its interim yield for crops whose harvesting is ongoing is 52 t/ha for sugar beets and 8.3 t/ha for corn, and the company expects that these results will improve by the end of the campaign. Last season, Astarta reported 55 t/ha yield for sugar beets and 7.6 t/ha yield for corn.

Alexander Paraschiy: The interim harvesting results imply Astarta may increase its total harvest of gains and oilseeds to 850-860 kt this season, rising from 790 kt last year. It also should harvest about 2.5 mmt of sugar beets, rising from about 1.8 mmt last year. With the company’s plans to increase sugar production to 450 kt this year (a 27% yoy increase), it should process about 2.8-2.9 mmt of sugar beets. This implies its self-sufficiency in own beets will improve to over 85% in 2016, from about 83% a year ago. We expect the increased grain and sugar volumes, as well as advantageous sugar prices, will enable the company to report stronger 2016 financials yoy. Our view on Astarta stock remains bullish.