KSG Agro to double harvest in 2012

KSG Agro (KSG PW) plans to double its crop harvest to 228,100 tons in 2012, Interfax reported yesterday, citing a company presentation. The company plans to increase its harvested area to 80,000 ha this season (1.7x yoy, based on our estimates), specifically by boosting planted area by 1.2x yoy for sunflower (on 1.2x growth in sown area), 2.6x yoy for wheat (2.4x yoy in sown area), 3.1x for barley (2.1x in sown area), and 4.5x for corn (4.3x in sown area). Management’s guidance for 2012, therefore, implies a yoy increase in yields for crops by 2%-50% on a year-on-year basis. In our view, this is rather ambitious taking into account that last year was especially successful for farming in Ukraine and it is unlikely weather conditions will be that supportive again this year.