Ovostar revenue falls 8%, EBITDA drops 43% in 1Q19

Egg producer Ovostar Union (OVO PW) reported a 8% yoy
revenue drop to USD 31 mln in 1Q19 (almost flat qoq), according to the company’s
May 15 publication. Export sales jumped 25% yoy to USD 18 mln, so the export
revenue share reached 58% in 1Q19 vs. 43% a year ago.

The company’s 1Q19 EBITDA fell 43% yoy to USD 5.4 mln
and its EBITDA margin slid to 17% vs. 28% a year ago. Its net profit declined
39% yoy to USD 4.5 mln (or a 37% qoq increase) in 1Q19. The company’s operating
cash flow before working capital changes dropped 60% yoy to USD 2.8 mln in
1Q19.

Andriy Perederey: Ovostar’s 1Q19 financial results confirmed our expectations about a revenue decrease to USD 30 mln. The company’s EBITDA was driven by weakening
operating results and a drop in shell egg prices in 1Q19. On the other hand,
the company’s export share increase was a positive factor for the company’s
currency risk. All in all, the  we are keeping our neutral view on Ovostar
stock.