Ovostar egg production rises 2% yoy, export drops 21% yoy in 9M21

Shell egg production at Ovostar Union (OVO PW) rose
1.5% yoy to 1,254 mln units in 9M21, the company reported in its Oct. 25
trading update. Its total hen flock slid 1.2% yoy to 8.0 mln heads and the
laying hen flock decreased 4.3% yoy to 6.6 mln as of end-September.

The company’s shell egg sales rose 9.9% yoy to 844 mln
units and its egg export volume plunged 21.4% yoy to 209 mln units in 9M21. Its
shell egg prices jumped 38.2% yoy to USD 0.076/unit in 9M21.

The company processed 376 mln eggs (a 18.1% drop yoy)
and sold 2.51 kt dry egg products (up 4.2% yoy), including 1.70 kt sold for
export (flat yoy) in 9M21. The sales of liquid egg product increased 7.5% yoy
to 10.23 kt and export volumes dropped 18.3% yoy to 2.88 kt in 9M21.

In 3Q21, the company’s egg production decreased 4.5%
yoy to 423 mln units (or almost flat qoq). Shell egg sales rose 2.2% yoy to 284
mln units (flat qoq) and export volumes declined 33.0% yoy to 65 mln units (or
18.8% lower qoq) in 3Q21. The average price of shell eggs jumped 46.2% yoy to
USD 0.070/unit (or 1.6% lower qoq) in 3Q21.

Andriy Perederey: Good news
is that the company was able to keep egg prices at a relatively high level and
increase domestic sales of eggs. Reductions in exports are likely related to
the company’s wish to save costs amid increased delivery costs.

The yoy price increase for all of Ovostar’s
products will drive a strong increase of its top line in 2021. However, as the
prices for key inputs (grain) are still at high levels, we see the company’s
margins will remain much weaker yoy in 2021. We expect Ovostar will generate
about USD 32 mln of revenue and some positive EBITDA in 3Q21 (after  USD
29 mln of revenue and negative EBITDA of USD 1.9 mln in 2Q21). We expect that
in 2021, the company will generate USD 122 mln revenue (about 24% yoy growth)
and USD 6 – 8 mln of EBITDA (vs. USD 8 mln in 2020).