KSG Agro boosts revenue 40%, EBITDA falls 3% yoy in 1H16

Ukrainian farmer KSG Agro (KSG PW) reported USD 7.14 mln in net revenue (+40% yoy) in 1H16, according to its Aug. 22 filing. Its EBITDA decreased 3% yoy to USD 6.04 mln, even though tis IAS 41 revaluation gains increased 14% yoy to USD 4.0 mln. The contribution of government grants to EBITDA decreased to 0.8% in 1H16 from 3.8% a year before. Due to smaller foreign currency revaluation losses (USD 1.28 mlm, down 82% yoy), the company reported a positive bottom line at USD 1.95 mln in 1H16.

The company’s operating cash flow before working capital changes decreased 67% yoy to USD 1.11 mln in 1H16. Its total debt remained broadly flat YTD at USD 46.82 mln, and net debt-to-LTM EBITDA slightly increased to 2.73x as of end-1H16. 

Alexander Paraschiy: The company’s interim results still reflect the previous year’s strong harvest, which was collected last season (fall 2015) from a total area of about 50,700 ha. In the current season, KSG Agro sowed an area almost twice as small (about 26,300 ha), which should result in the decrease of its top and bottom lines since 2H16. Therefore, we do not see KSG PW stock among our top picks.