MHP poultry sales jump 27% yoy in 4Q18, 11% in 2018

Ukraine’s leading poultry producer MHP (MHPC LI,
MHPSA) reported its 4Q18 poultry sales jumped 26.8% yoy to 144.2 kt (though a
10.3% qoq drop), according to its Jan. 24 trading update. The company produced
159.4 kt of poultry in 4Q18, a 12.6% yoy increase (5.8% qoq growth). Its
average poultry price was USD 1.45/kg in 4Q18, which is 3.9% lower yoy and 1.7%
lower compared to 3Q18.

In 2018, the company sold 593.5 kt of poultry (an
11.4% yoy increase) and exported 286.8 kt, or 29.8% more yoy. Its export share
in sales volumes rose to 48.3% from 41.5% a year ago. The average selling price
in UAH terms rose 11.9% yoy to UAH 39.9/kg and improved 9.3% yoy in USD terms
to USD 1.46/kg in 2018.

MHP also reported its final harvest results as crop
production jumped 32.8% yoy in 2018. The main driver was its corn harvest of
1,344 kt, or 50.5% higher yoy. Its corn yield jumped 49.3% yoy to 10.9 t/ha. At
the same time, yields of sunflower and wheat increased 6.7% yoy (to 3.2 t/ha)
and 1.7% yoy (to 6.1 t/ha), respectively.

The company also announced its 2018/19 sowing campaign
results of winter crops, with total sowing area of 94,000 ha, or 8.5% higher
than in the previous season. The company’s sowed area under winter wheat
decreased by 3.1% yoy to 47,000 ha, while its area under rapeseed increased by
27.2% yoy to 38,540 ha.

Andriy Perederey: MHP enjoyed
no seasonal increase in its poultry prices in 4Q18, which is a disappointment.
We estimate its poultry segment revenue will be about USD 870 mln in 2018, or
22% yoy higher. Also, we see that the company’s poultry segment EBITDA will be
closer to the lower range of our expectations,
or USD 320 mln. On the other hand, we see that the company will be able to
reach the upper range of our expectations on aggregate 2018 EBITDA (USD 480
mln) owing to the farming segment’s improved performance. We remain bullish on
MHP stock and neutral on its Eurobonds.