MHP’s early corn yields average 10 mt per ha
7 October 2011
MHP (LSE: MHPC LI, BUY), Ukraine’s largest poultry producer, reported yesterday its corn yield was 10 mt per ha, with 11% of corn harvested. MHP sowed about 111 ths ha with a corn in 2010/11, or 44% of its acreage this season. Yegor Samusenko: The yield of 10 mt of corn per ha is impressive for Ukraine, and is almost two times above Ukraine’s average this year as of the latest reported day. We think it is too early to project these results to the full corn harvest based only on 10% harvested so far, though we note that its y-o-y growth of 28% is comparable with the latest average corn yield growth of 29% y-o-y in Ukraine so far. Should MHP’s average yield on corn this year be 10 mt per ha, we estimate the company could earn USD 100-120 mln in EBITDA on the corn, 29%-34% of its 12M trailing EBITDA. We deem the news positive for the stock and expect it to ease speculation on the market about the risk of it breaching its Eurobond covenant’s Net Debt to 12M EBITDA ratio (see our note from yesterday for more on this risk).
