Ovostar shell egg prices surge 47% yoy in 1Q18

Egg producer Ovostar sold 342 mln of shell eggs (24%
yoy higher) at an average price of UAH 2.06 per unit (a 47% yoy surge) in 1Q18,
the company reported in its Apr. 25 operating update. Its export of shell eggs
swelled 68% yoy to 138 mln, or 40% of total sold. Ovostar processes 139 mln
eggs (up 40% yoy) and sold 594 t of dry egg products (up 7% yoy) and 3,15 kt
of liquid egg products (up 51% yoy) in 1Q18. Average prices of dry and liquid
egg products were 17% and 26% higher yoy, respectively.

Ovostar’s sales volumes fell in 1Q18 as compared to
4Q17, based on our calculations, by 7%, 51% and 43% for shell eggs, dry
products and liquid products, respectively. However, their average prices
increased 3%, 19% and 21% qoq, respectively.

The company’s total hen flock was unchanged yoy and
qoq at 7.7 mln as of end-1Q18, while its laying hen flock decreased by about 3%
yoy and 2% qoq to 6.5 mln. Its egg production decreased 4% yoy and 7% qoq in
1Q18 to 386 mln units.

Alexander Paraschiy: Favorable product pricing and boosted volumes will enable Ovostar to
demonstrate about a 65% yoy jump in net revenue in 1Q18, we estimate. Its
EBITDA might nearly double yoy in the quarter. In general, we see the company’s
results as strong, but a visible decline in the laying hen flock is our point
of worry. We remain neutral on Ovostar stock as we see it fairly priced at the
moment, but we still expect a positive market reaction to the company’s strong
operating results.