Ovostar revenue rises 40%, EBITDA slides 29% in 9M21

Ukraine’s egg producer Ovostar Union (OVO PW) reported
a 39.1% yoy increase in revenue to USD 94.4 mln in 9M21, according to its Nov.
16 filing. The company’s EBITDA declined 28.9% yoy to USD 5.4 mln, with the
EBITDA margin decreasing 5pp to 6% in 9M21. The company’s revenue from shell
egg sales jumped 46.0% yoy to USD 65.1 mln, while egg products sales
contributed USD 29.3 mln to the company’s revenue in 9M21, or 26.0% more yoy.

The company’s operating cash flow before working
capital changes increased 12.8% yoy to USD 9.6 mln and net cash from operations
grew 16.8% yoy to USD 13.3 mln in 9M21. Ovostar’s CapEx decreased 74.8% yoy to
USD 0.6 mln, while the company’s investments in biological assets rose 32.5%
yoy to USD 13.8 mln in 9M21.

Its net debt increased 21.0% yoy to USD 10.2 mln and
its net debt-to-LTM-EBITDA ratio reached 1.75x at the end of September 2021,
from a negative 4.2x year ago.

In 3Q21, Ovostar’s net revenue rose 41.9% yoy to USD
32.9 mln. Shell egg sales contributed USD 20.3 mln to the company’s net revenue
in 3Q21, or 28.9% more qoq, and egg product sales rose 70.0% qoq to USD 12.6
mln in 3Q21. The company’s EBITDA decreased 32.1% yoy to USD 1.9 mln in 3Q21.

Andriy Perederey: The company’s results were in line with our expectations for 3Q21. The company’s revenue was driven by high egg
prices, while its EBITDA margin suffered, as the prices for key inputs (grain)
are still at high levels. We expect that egg prices will be almost flat in
4Q21, so the company’s margins will remain weaker yoy. Also, we didn`t change
our expectations that in 2021, the company would generate USD 122 mln revenue
(about 24% yoy growth) and USD 6 – 8 mln of EBITDA (vs. USD 8 mln in 2020).