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Ovostar reports expectedly strong 1H14 results

Ovostar reports expectedly strong 1H14 results

29 August 2014

Ukrainian egg producer Ovostar Union (OVO PW) reported a 6% yoy increase in its revenue to USD 34.9 mln in 1H14, according to its Aug. 29 filing. Its shell eggs (sales up 14% yoy to USD 23.5 mln) and sunflower segments (+77% yoy to USD 4.5 mln) were the main revenue drivers, while revenue in its egg products segment fell 11% yoy. In USD terms, the cost of goods sold decreased 4% yoy and the company cut its selling expenses by 20% yoy, enabling it to report a 42% yoy increase in its EBITDA to USD 13.5 mln in 1H14. The company’s bottom line advanced 67% yoy to USD 11.2 mln.

 

Alexander Paraschiy: Ovostar’s spectacular financial results were expected, given that it earlier reported that it was benefiting from low prices for its key input, fodder. The next half of the year could be slightly worse for the company, as egg prices are likely to lag behind grain/fodder price growth. Nevertheless, it’s clear now that 2014 will be a record-high for Ovostar in terms of its top line and profitability. Ovostar remains one of our top equity picks. What differentiates Ovostar from most other Ukrainian food and agri companies is that the company has no leverage (and therefore has no need to write off ForEx losses) and has no exposure to the war-afflicted Donbas region.

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