Ovostar shell egg sales drop 17% in 2019

The laying hen flock at Ukrainian egg producer Ovostar
Union (OVO PW) rose 4.7% yoy to 6.7 mln as of end-2019, according to its Jan.
27 trading update. Its egg output decreased 2.3% yoy to 1.587 bln units in
2019. Shell egg sales dropped 16.9% yoy to 1.147 bln units in 2019. The export
sales of shell eggs slid 10.6% yoy to 525 mln units, while the domestic sales
fell 21.7% yoy to 622 mln units in 2019. The average shell egg price decreased
11.7% yoy to UAH 1.61/unit and in USD terms slid 7.5% yoy to USD 0.062/unit in
2019.

The company’s sales of dry egg products rose 2.7% yoy
to 2.8 kt in 2019 (export sales rose 8.8% yoy to 2.1 kt, while domestic sales
decreased 11.4% yoy). The average dry egg product price dropped 18.6% yoy to
UAH 107.2/kg and in USD terms declined 14.3% yoy to USD 4.15/kg in 2019.

The company’s liquid egg products sales rose 12.2% yoy
to 13.8 kt (export sales rose 15.5% yoy to 6.5 kt, while domestic sales
increased 9.4% yoy). The average price of liquid egg products slid 6.0% yoy to
UAH 37.15/kg, or slid 0.7% yoy in USD terms to USD 1.44/kg in 2019.

The company’s annual results imply that in 4Q19,
Ovostar produced 396 mln of eggs (6.4% less yoy) and sold 259 mln of eggs
(20.3% yoy drop) at an average price of USD 0.065 (2.3% less yoy). Its 4Q19
sales of dry egg products surged 89.2% yoy to 1.05 kt, while the average price
fell 21.2% yoy to USD 3.8/kg. Sales of liquid egg products slid 2.6% yoy to 3.3
kt and its average selling price advanced 45.8% yoy to USD 2.08/kg in 4Q19.

Andriy Perederey: The results
imply Ovostar’s 4Q19 revenue reached USD 27.8 mln (9% decline yoy) and its 2019
revenue was USD 105 mln (16% decline yoy). We expect that company’s total
EBITDA will be in the range of USD 7.5-8.5 mln in 2019 vs. USD 21.9 mln a year ago.
We expect no significant market reaction to the company’s trading update.