Avangardco Investments
Una de huevos! Ya que huevos siempre comeremos o no?
AvangardCo Investments Public Limited, an agro industrial company, operates in the egg and egg processing industry in Ukraine and internationally. Its Shell Eggs segment is engaged in the breeding of industrial laying hens; and production and sale of shell eggs. The company’s Poultry segment is involved in the production and sale of baby chicks; breeding of young birds for sale; and sale of birds for slaughter. Its Animal Feed segment produces and sells feeds. The company’s Egg Products segment is engaged in the processing and sale of egg products. Its Other Activities segment sells goods and services, poultry meat and by-products, plant production, poultry manure, etc. The company also produces and sells mixed fodder; and provides rental services. As of December 31, 2013, it had a total flock of 32.5 million hens. It sells its products to customers through retail outlets and supermarkets under the Kvochka, Kvochka Domashnya, and Kvochka Organic brand names. The company is based in Kyiv, Ukraine.
Ratios:
- Price/Earnings 1.7x
Price/Sales 0.5x
Price/Book 0.3x
Price/Cash Flow 1.7x
Noticias recientes:
Avangardco Investments Public Limited Reports Production Results for the Nine Months Ended September 30, 2014
Oct 24 14
Avangardco Investments Public Limited reported production results for the nine months ended September 30, 2014. For the period, total production was 5,114 million pieces against 5,118 million pieces a year ago. This is due to decrease in the total population of laying hens, which also led to a decline in the sales of shell eggs to third parties.
Avangardco Investments Public Limited Declares Total Dividend, Payable on December 31, 2014
Oct 1 14
The Board of Directors of Avangardco Investments Public Limited has declared the total dividend payment of $29.5 million, representing $4.625 per ordinary share. The dividend payment will be made by December 31, 2014 to shareholders of record as of October 14, 2014.
Avangardco Investments Public Limited, Annual General Meeting, Sep 30, 2014
Sep 9 14
Avangardco Investments Public Limited, Annual General Meeting, Sep 30, 2014., at 09:00 E. Europe Standard Time. Location: Leoforos Spyrou Kyprianou 67. Agenda: To consider the reports of the directors and auditors of the company and the audited financial statements of the company for the year ended 31 December 2013; to consider the annual report of the company for the year ended 31 December 2013; to consider reappointment of and the fixing of the remuneration of the statutory auditors; and to consider ratification of dividend payments according to the results of the year ended 31 December 2013.
Le pueden expropiar en Crimea pero supone un 5% de sus activos: http://www.ft.com/cms/s/0/b3f7fa70-26d7 … z3JDBPlFot
Unos cuantos datos financieros, los de 2014 los tengo que buscar:
Comentarios que encuentro:
– Avangardco is audited by a major firm: KPMG
AVGR is the world 2nd largest egg producer and Europe’s No 1 producer of shell eggs and dry egg products. AVGR’s domestic market share of 57% of industrially produced shell eggs is over 5 times the share of its nearest competitor.
AVGR has been steadily increasing production volume (12% YoY growth) and is favourably benefitting from structural headwinds in the market as small and inefficient players are withdrawing from the market, unable to compete on cost. At the same time, rural household production has been decreasing as living standards increase and people gradually migrate to the cities. As a result, the company has increased its domestic market share from 23% in 2007 to 57% in 2013 at the expense of smaller industrial producers, whose share has decreased from 56% to 22%, effectively halving in 6 years.
The company is 77.5% owned by the oligarch Oleg Bakhmatyuk structured through UkrLandFarming which is the parent company of AVGR.
At first glance, this could be a reason for concern; however, one has to understand how businesses in the former Soviet Bloc operate – without the right political connection and negotiating power these businesses will find it challenging to operate. In that respect, Oleg has sufficient business clout and power to negotiate his way into further growing this company.UkrLandFarming Plc (ULF) is one of Ukraine’s largest agribusinesses, and is among the top 3 producers of grain. It is also a major grower of sugar beet, wheat and barley, besides owning a 67,000-head cattle herd, including 23,000 dairy cows. ULF operated 532,000 ha of land as of end-2012 and currently has 1.6 Mt of storage facilities. Its 2012 crop mix included corn (38% of harvested area), wheat (18%) and sugar beet (9%).
ULF has been considering a stockmarket flotation for the past 3-4 years. It postponed a private placement in 2011 due to unfavourable markets and is now set to IPO by 2015. If it IPOs, AVGR’s minority shareholders will be offered the opportunity to convert their stakes in into shares of ULF.
Some may view this as a risk for the AVGR stock. In my view however, this could be a positive catalyst – in Jan 2014, Cargill, the US agricultural giant, bought 5% of the company. This deal gives ULF a very strong strategic partner that will help them achieve their goals of broadening exports, especially in Asia. Cargill paid $200m for its 5% stake, valuing the company at $4 billion, or 6.7x 2013 EBITDA. At current EBITDA and Net Debt levels, this multiple implies more than 200% upside from AVGR’s current market price of $9.0.
Additionally, the company signed an agreement with China CAMC Engineering, a state-owned infrastructure group, which will build a grain port, warehouses and meat-production centres in the eastern European country, financed by $4.1 billion in Chinese loans, according to an exchange filing by the Chinese company. Both parties are considering the building of grain silos, pork and poultry production companies as well as construction of a port near the Ukrainian Black Sea.
The Ukrainian hryvnia (UAH) has hit a 10 year low since January, devaluating 50% in 2014 YTD, reflecting the country’s political instability. This could potentially put pressure on margins, as the cost of raw materials represent 80% of COGS and one of AVGR’s key components of raw materials are oil seeds, whose prices are linked to the USD. However, I believe that the company’s overall cost advantage is large enough to absorb any potential negative impact of UAH devaluation.
Furthermore, the company is using hedges to mitigate FX fluctuations efficiently. Furthermore, 30% of the company’s revenues come from exports, which are USD denominated, which could serve as an additional natural hedge – roughly 95% of the company’s cash is held in dollars.
Finally, the UAH devaluation seems to be only temporary and doesn’t seem to be sustainable in the long run – the country has been taking measures to stem the decline by using its foreign exchange reserves to buy hryvnia.
AVGR is reporting average shell eggs selling prices that are 20-30% above competitor’s and are nearly in line with retail prices. This price premium is partially driving the high margins. At first glance this may seem unsustainable; however, we need to bear in mind that the company has a major pricing power and a price setter advantage by virtue of its scale (its closest competitor is 5 times smaller). The company’s share of products sold to intermediaries (as well as related party transactions) is gradually declining, and the company has also started developing a premium retail brand under the ‘Kvochka’ label and is Avangard also intending to develop private label for large domestic grocery retailers. Rising middle class in Ukraine and customer preferences gradually trending up towards better quality products would be key to premium price sustainability going forward.
Another concern regarding margins sustainability stems from the fact that the company is that 72% of its COGS are related to feed grains and oilseeds. AVGR is not involved in grain production but uses sophisticated trading and purchasing to secure below-market input prices, which are instrumental in maintaining high margins (its EBITDA margin could be 10% lower).AVGR enters into pre-paid contracts with small individual farmers and thus finances their sowing campaign by paying c.50-70% of the contract price in 1Q/2Q and the remainder upon collection during the harvest in 3Q. In exchange for early financing, the company negotiates better purchasing terms (up to 20-30% discounts to prevailing market prices when the contracts are signed), which helps it to sustain margins in times of high commodity prices.
Finally, even if company is not able to use these methods to secure low input prices and margins get squeezed, the company has enough buffer to absorb any fluctuations in costs or pricing in the foreseeable future (AVGR current margins of 40% vs industry average of 20% and Cal-Main’s historical 10% margin).
Currently AVGR profits are benefitting from agricultural tax subsidies – both VAT and FAT subsidies (Fixed Agricultural Tax), which contribute to favourable margins. Some may argue that if these are lifted, the company may even become loss making. Having investigated the Ukrainian Tax Code, it is currently not mentioning if / or when FAT subsidies will be lifted, so I do not expect this to pose a danger to the company profitability any time soon. Regarding VAT subsidies, these may or may not to be lifted until 2018 – 2020, so there is no imminent tax danger looming.
Los comentarios en este articulo son interesantes: http://investingsidekick.com/weekend-st … vangardco/
Esta la llevo siguiendo desde hace unos meses. A primera vista mirando los numeros parece muy interesante pero hay que tener huevos (nunca mejor dicho) para comprar tal como esta el panorama en Ucrania.
Unos apuntes mas:
– Las propiedades es Crimea no son las unicas en peligro. Tambien tiene muchas propiedades en las provincias del este de Ucrania, que son muy pro-rusas: http://avangard.co.ua/eng/activity/loca … ities-map/
– Hasta hoy Avangardco no exportaba nada a la Union Europea (http://avangard.co.ua/eng/activity/locations/markets/), sin embargo esto parece que va a cambiar http://www.londonstockexchange.com/exch … 99147.html
– Al mayor productor de huevos de Estados Unidos Cal-Maine Foods no le va nada mal ultimamente en bolsa: https://www.google.com/finance?chdnp=0& … lAWyt4CQAw
Me pregunto por los motivos de las últimas caídas… Que han sido contundentes.
Ultimo precio $4.85 con una caida del mas del 17% en la ultima cotizacion!
Unos 400 millones de dolares de capitalizacion.
Parece que el mayor impacto viene de la caida de la divisa… habria que analizar mas en detalle como le influye.
Ukraine’s central bank will raise its key discount rate by 1.5 percentage point to 14 percent, the third increase this year as the country’s battle with pro-Russian separatists weakens the hryvnia and spurs inflation.
The increase will lift the rate to its highest level since 2001, effective tomorrow, according to a statement on the bank’s website.
Ukraine is facing a surge in inflation as the worst military crisis in more than two decades of independence resonates through the economy. Consumer prices rose 19.8 percent in October, the fastest since February 2009, after the government raised household utility tariffs to qualify for an international bailout. At the same time, the hryvnia lost 59 percent in the first 10 months of the year against the dollar, according to the central bank.
“A worse market outlook and further hryvnia devaluation are causing additional inflation pressure, which will remain during the beginning of next year,” the bank said in the statement. “Stabilizing measures taken by the central bank need to be reinforced by rate policy tools toward increasing the domestic value of the hryvnia.”
The monetary authority said the decision will have “a minimum effect on economy, because bank credit activity is low due to high risks” linked to the conflict in the east. The central bank sees Ukraine’s economy contracting 7 percent this year.
La divisa puede tener cierto impacto a corto plazo, sobre todo con la mayor parte de su deuda en Euros, pero la deuda no es mucha, y la inflacion hara el resto, los huevos tendran que subir de precio.
Distribucion del negocio: (Solo con el tercio del negocio que tiene fuera de Ucrania parece ya motivo suficiente como para comprar, estaria en un per 5-6)
Los problemas en oriente medio han tenido un efecto en las exportaciones, pero eso yo creo que va a estabilizarse pronto.
Unas cifras:
Sales 2014 577 M
EBIT 2014 145 M
Net income 2014 90,0 M
Debt 2014 72,0 M
Yield 2014 17,4%
Sales 2015 585 M
EBIT 2015 160 M
Net income 2015 105 M
Finance 2015 6,00 M
Yield 2015 18,1%
Mas datos y graficos!
Los ratios son brutales, aunque el negocio cayese a la mitad, seria buena inversion, que se nos escapa?