Ukrainian egg producer Ovostar Union (OVO PW) reported its preliminary 2012 financial results on Apr. 2, including revenue of USD 60 mln (+19% yoy). The key contributors to the company’s revenue growth were its egg product segment (1.3x yoy growth to USD 18 mln) and a new sunflower oil segment (nearly tripled yoy to USD 4 mln). The company’s preliminary 2012 EBITDA amounted to USD 27 mln (+21% yoy) and profit was USD 24 mln (+18% yoy). Cash flow from operations increased 1.7x yoy to USD 17 mln.
The company reported it increased egg production 15% yoy to 719 mln units on a 35% increase in its laying hen flock over the year to 3.1 mln. In the report, the company highlighted its current implementation of the second stage of its investment program aimed to increase egg production to 1.15 – 1.25 bln units in 2014 (up 60% – 75% compared to 2012).
Alexander Paraschiy: The company’s preliminary revenue results came in better than we initially expected (USD 57.4 mln), which we attribute to prices of egg products that the company enjoyed in 4Q12, which were also higher than we expected. While Ovostar’s preliminary operating profit number is a positive surprise for us as well, we note that it could have been affected by a change in the fair value of biological assets (which added USD 3.8 mln to the company’s profit in 9M12). Nevertheless, the preliminary results support our view on Ovostar as one of the top picks in the Ukrainian equity universe.