Ovostar revenue rises 74%, EBITDA jumps 97% in 1H18

Net revenue at Ukrainian egg producer Ovostar (OVO PW)
rose 74% yoy to USD 63.5 mln in 1H18, according to its interim report released
on Aug. 30. The improvement was driven by surging sales in both segments: shell
egg revenue advanced 87% yoy to 46.5 USD mln, while egg product revenue
improved 55% yoy to USD 17.0 mln. Exports sales jumped 83.1% yoy to USD 27.3
mln, to 43% of sales in 1H18 (vs. 40.1% a year ago).

Ovostar’s EBITDA surged 97% yoy to USD 13.8 mln. The
company’s bottom line improved 2.67x yoy to USD 10.4 mln in 1H18. Its operating
cash flow before working capital changes advanced 109% yoy to USD 16.5 mln in
1H18. The company’s total debt decreased 23% YTD to USD 11.4 mln, while net
debt swelled to negative USD 10.6 mln vs. negative USD 1.3 mln as of end-2017.

Andriy Perederey: Ovostar’s
1H18 financials are in line with our expectations of 71% revenue
growth and nearly doubling EBITDA. Strong egg
prices (the company’s local average selling price climbed 26.4% yoy to USD
0.056/unit and average export price rose 17.6% yoy to USD 0.064/unit in 1H18)
and higher volumes supported the company’s financials.

Usually, egg prices have the highest seasonal
growth in the fourth quarter, which should boost Ovostar’s results even more in
2H18. We remain neutral on Ovostar stock, but expect a positive market reaction
to the company’s strong interim results.