Ovostar egg production swells 28% in 1Q17

Egg producer Ovostar Union (OVO PW) reported strong operating results for 1Q17 on April 21, with egg production swelling 28% yoy to 404 mln units. This was a result of growth in the company’s laying hen flock, which stood at 6.7 mln as end-March (18% yoy, 3% YTD). In turn, shell egg sales rose 37% yoy to 276 mln units, with export sales growing only 18% yoy (to 82 mln) on some interim restrictions in core markets. This means shell egg sales to the domestic market jumped 47% yoy. Meanwhile, shell egg prices decreased 8% yoy to UAH 1.40 per unit in 1Q17.

The company processed 99 mln eggs and sold 2,090 t of liquid egg products (-7% yoy) and 553 t of dry products (+36% yoy) in 1Q17.

Alexander Paraschiy: Ovostar’s operating performance continues to surprise, especially against the background of the continuous whining of its bigger peer Avangardco (AVGR LI). Based on the announced results, we estimate Ovostar will post about an 11% yoy increase in net revenue to USD 19.7 mln in 1Q17. We also expect the company’s 1Q17 EBITDA will be slightly higher yoy. That said, we see some minor growth potential for OVO PW stock in the short term.