MHP poultry sales rise 27%, USD price gains 7% qoq in 2Q17

Ukraine’s largest poultry producer MHP (MHPC LI,
MHPSA) sold 157 kt of poultry meat in 2Q17, an 11.4% yoy increase (and a 26.9%
qoq advance), according to its July 18 trading update. The improvement was a
result of higher export sales (a 31% yoy rise, 45% qoq increase to 71.3 kt in
2Q17), while domestic poultry sales decreased 0.8% yoy (but rose 14.9% qoq).

Exports accounted for 45% of total company poultry
sales (from 38% a year ago). During the quarter, the average selling poultry
price in UAH terms rose 4.4% qoq to UAH 32.9/kg and improved in USD terms by
6.5% to USD 1.24/kg.

In 1H17, MHP’s poultry sales increased 14% yoy to 284
kt, as the average selling price in UAH terms advanced 18% yoy to UAH 32.4/kg
(a 13% yoy rise to USD 1.21/kg in dollars).

Sales of processed meat increased 7% yoy in 2Q17 to
9.0 kt and 12% yoy in 1H17 to 17.2 kt. The average selling price for processed
meat rose 5% yoy in 1H17 to USD 1.7/kg.

Andriy Perederey: The continuing
increase in poultry exports reduces the company’s local currency risk, but
indicates that the local poultry market is already saturated, making the
company’s production expansion dependent on external markets.

On the other hand, higher poultry
prices are a positive surprise, so we are upgrading our 2017 EBITDA estimate to
USD 480 mln in 2017 (a 15.7% yoy rise). Recent hryvnia firmness and anticipated
strong poultry sales results will support our expectations. This should enable
MHP to finance the construction of its new poultry complex and service its
debt. We are keeping our neutral view on MHPSA Eurobonds.