MHP ups chicken sales 17% yoy in 9M12, reports strong early harvest

MHP (MHPC LI), Ukraine’s leading poultry producer, today reported a 7% decline in tonnage of poultry sales in 3Q12 to 93.2 kt (-3% qoq) and a 3% decrease in 9M12 to 274.8 kt. The company said the key difference is due to 10 kt destocking a year ago. On beneficial poultry pricing (the 3Q price was UAH 17.57/kg, +1% qoq and +9% yoy), the company reported a 2% yoy increase in chicken revenues to an estimated USD 200 mln in 3Q12 (still down 3% qoq), which we estimate would bring 9M12 chicken sales to USD 585 mln (up 17% yoy). In its agricultural segment, the company reported healthy yields for its early crops: wheat increased 6% yoy to 5.4 t/ha, sunflower grew 11% yoy to 3.0 t/ha, and rapeseed rose 21% to 3.4 t/ha. MHP also confirmed its commitment to start industrial production at its brand new Vinnitsa factory in late 2012.

Alexander Paraschiy: The company beat our expectations on both poultry pricing (we expected 12% growth in prices, while MHP posted a 20% yoy increase in 9M12) and crop harvest (we foresaw a slight decline on overall worse weather conditions). We therefore see a significant upside risk for our and the management’s forecasts of the company’s financials (including USD 450 mln EBITDA for 2012) and remain bullish on the company’s stock.