Kernel oilseed crushing rises 11% yoy in 9MFY20

Sunflower seed crushing volumes at Ukraine’s largest
sunflower oil producer Kernel (KER PW, KERPW) rose 11.2% yoy to 2.52 mmt in
9MFY20 (July 2019 – March 2020), according to its operating update published on
Apr. 23. The company’s sunflower oil sales dropped 12.4% yoy to 1.03 mmt in
9MFY20.

The company’s silo storage volumes slid 1.8% yoy to
4.1 mmt, while its terminal throughput jumped 41% yoy to 4.8 mmt and its grain
export rose 29.7% yoy to 6.0 mmt in 9MFY20.

In 3QFY20 (January-March 2020), Kernel’s sunflower
crushing volumes climbed 3.6% yoy to 940.7 kt (or a 0.2% slide qoq), while
total oil sales decreased 2.2% yoy to 389.6 kt (or a 9.9% rise qoq). The
company’s terminal throughput jumped 65.5% yoy to 1.9 mmt (and improved 14.5%
qoq), while the company’s grain exports advanced 41.1% yoy to 2.2 mmt (or slid
4.8% qoq) in 3QFY20.

Andriy Perederey: The company
delivered strong operating results in its grain crushing and trading segments.
And we expect that Kernel’s infrastructure and trading segments will support
its EBITDA in FY2020. Also, the company could boost its oil sales in 4Q, so we
expect a slight increase in oil sales yoy in FY2020. But the soft crop prices
and lower corn yield in the last season will put pressure on the company’s
farming EBITDA in FY2020.

We are keeping unchanged our estimate for total
company EBITDA in the range of USD 380-390 mln in FY2020 (vs. USD 346 mln a
year ago). We are also maintaining our neutral view on KERPW bonds.