- •Investment Case 11
- •Valuation summary 37
- •Investment case 53
- •Investment Case
- •Companies Compared Stock data
- •Key metrics
- •Per ha comparison
- •Management credibility
- •Market Overview Summary
- •Ukraine in global context Ukraine produces 2-3% of world soft commodities
- •Sunflower oil, corn, wheat, barley and rapeseed are Ukraine’s key soft commodities to export
- •Ukraine is 8th in arable land globally
- •Key inputs used in crop farming Ukraine`s climate favorable for low-cost agriculture
- •Soil fertility map
- •Machinery use far below developed countries
- •Land trade moratorium makes more benefits
- •Fertilizer use
- •Inputs prices: lease cost is Ukraine’s key cost advantage
- •Case study: Production costs in Ukraine vs. Brazil for corn and soybean
- •Farming Efficiency Ukrainian crop yields lag the eu and us, on par with Argentina and Brazil, above Russia’s
- •5Y average yields, t/ha and their respective 10y cagRs
- •Yields at a premium in Ukraine on the company level
- •Growth Growth should come from yield improvement, crop structure reshuffle and acreage increase
- •Crop structure is gradually shifting to more profitable cultures
- •Combined crop structure of listed companies
- •Ukraine`s 2012 harvest outlook
- •Valuation
- •Valuation summary
- •Valuation summary
- •Asset-based approach
- •Asset-based valuation
- •Valuation premium/discount summary
- •Location matters: Value of land by region
- •Yields efficiency comparing to benchmark region
- •Cost efficiency
- •Adding supplementary businesses
- •Valuation summary for other assets
- •Cost of equity assumptions
- •Model assumptions
- •Landbank growth capped at 30%
- •Crop structure
- •Biological revaluation (ias 41) excluded
- •Land ownership
- •Company Profiles Agroton a high cost producer
- •Investment case
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Agroton in six charts
- •Operati
- •Industrial Milk Company Corn story
- •Investment case
- •A focus on the corn explains high margins
- •Location favourable for corn
- •Well on track with ipo proceeds
- •Weak ebitda margin in 2012 explained by non-cash items
- •Valuation
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Ksg Agro On the road to space/Not ready to be public
- •Investment Case
- •A 5x yoy boost in total assets looks strange to us
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Ksg Agro in six charts
- •Mcb Agricole Acquisition target with lack of positives for minorities
- •Investment Case
- •Inventories balance, usd mln
- •Overview of acquisitions of public farming companies in Ukraine
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement, usd mln
- •Mcb Agricole in six charts
- •Mriya Too sweet to be true
- •Investment Case
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Mriya in six charts
- •Sintal Agriculture
- •Investment Case
- •25% Yoy cost reduction in 2011 should improve margins
- •Irrigation is a growth option
- •Inventory balance, usd mln
- •Valuation
- •Valuation
- •Operating assumptions
- •Financials
- •Income statement*, usd mln
- •Sintal Agriculture in six charts
- •Astarta Sugar maker
- •Kernel Grain trader actively integrating upstream
- •Poultry producer
- •Appendices Land value
- •Current landowner income capitalization model
- •Farmer income capitalization model
- •Normative value
- •Biological asset revaluation
- •How do we adjust the income statement to be on a cost basis?
- •Ias 41 application summary
- •Appendix: Crop production schedule Crop schedule, based on 2012 harvesting year
- •Investment ratings
- •Contacts
Valuation
Our DCF valuation of Agroton yields a fair price of USD 2.3 per share (PLN 7.8). For detailed operating assumptions, please refer to the next page.
DCF output, USD mln
|
2012E |
2013E |
2014E |
2015E |
2016E |
2017E |
2018E |
2019E |
2020E |
2021E |
|||||
EBITDA |
21 |
21 |
24 |
25 |
26 |
28 |
30 |
31 |
33 |
35 |
|||||
EBIT |
14 |
13 |
15 |
16 |
17 |
19 |
20 |
22 |
23 |
25 |
|||||
Effective Tax Rate |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
2% |
|||||
Taxed EBIT |
14 |
13 |
15 |
16 |
17 |
18 |
20 |
21 |
23 |
25 |
|||||
Plus D&A |
7 |
8 |
9 |
9 |
9 |
9 |
9 |
10 |
10 |
10 |
|||||
Less CapEx |
(33) |
(15) |
(11) |
(6) |
(6) |
(6) |
(6) |
(6) |
(7) |
(10) |
|||||
Less change in OWC |
17 |
(8) |
(5) |
(4) |
(4) |
(4) |
(4) |
(4) |
(4) |
(4) |
|||||
FCFF |
- |
(3) |
8 |
15 |
16 |
18 |
19 |
21 |
22 |
21 |
|||||
WACC |
18% |
18% |
18% |
18% |
18% |
18% |
18% |
18% |
18% |
18% |
|||||
Sum of disct'd CF's |
|
56 |
|
|
|
|
|
|
|
|
|||||
Terminal Value |
|
|
|
|
|
|
|
|
|
138 |
|||||
Disct'd TV |
|
32 |
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Firm value |
|
89 |
|
|
Portion due to TV |
|
|
36.5% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Less Net Debt |
|
(38) |
|
|
|
|
|
|
|
|
|||||
Equity Value as of 07 March 2013 |
50 |
|
|
Implied exit EBITDA Multiple |
|
3.9 x |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Perpetuity Growth Rate |
|
|
|
|
|
|
|
|
|
3.0% |
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Fair price of ord. share |
|
USD 2.3 |
|
|
|
|
|
||||||||
|
|
PLN 7.8* |
|
|
|
|
|
||||||||
* At PLN/USD rate of 3.50 as of May 23
Source: Concorde Capital estimates
Sensitivity analysis, PLN per share
|
Perpetuity Growth Rate |
|
|
Exit Multiple (EBITDA) |
|||||||||
|
2.0% |
2.5% |
3.0% |
3.5% |
4.0% |
|
|
1.9 x |
2.9 x |
3.9 x |
4.9 x |
5.9 x |
|
WACC |
|
|
|
|
|
|
WACC |
|
|
|
|
|
|
-3.0% |
9.8 |
10.0 |
10.3 |
10.5 |
10.8 |
|
-3.0% |
7.0 |
8.7 |
10.3 |
11.9 |
13.5 |
|
-2.0% |
9.0 |
9.2 |
9.4 |
9.6 |
9.9 |
|
-2.0% |
6.4 |
7.9 |
9.4 |
10.9 |
12.4 |
|
-1.0% |
8.2 |
8.4 |
8.6 |
8.8 |
9.0 |
|
-1.0% |
5.8 |
7.2 |
8.6 |
10.0 |
11.4 |
|
+0.0% |
7.5 |
7.6 |
7.8 |
8.0 |
8.2 |
|
+0.0% |
5.2 |
6.5 |
7.8 |
9.1 |
10.4 |
|
+1.0% |
6.8 |
6.9 |
7.1 |
7.3 |
7.5 |
|
+1.0% |
4.7 |
5.9 |
7.1 |
8.3 |
9.5 |
|
+2.0% |
6.1 |
6.3 |
6.5 |
6.6 |
6.8 |
|
+2.0% |
4.2 |
5.3 |
6.5 |
7.6 |
8.7 |
|
+3.0% |
5.6 |
5.7 |
5.8 |
6.0 |
6.2 |
|
+3.0% |
3.8 |
4.8 |
5.8 |
6.9 |
7.9 |
|
Source: Concorde Capital estimates
WACC decomposition
|
2012E |
2013E |
2014E |
2015E |
2016E |
2017E |
2018E |
2019E |
2020E |
2021E |
Debt-to-Equity |
0.40 |
0.39 |
0.32 |
0.30 |
0.30 |
0.30 |
0.30 |
0.30 |
0.30 |
0.30 |
Avg. after-tax Interest Rate |
12.6% |
12.7% |
13.6% |
13.6% |
13.6% |
13.6% |
13.6% |
13.6% |
13.6% |
13.6% |
Ukr. Eurobonds YTM |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
9.0% |
Equity premium |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
6.0% |
Comp.-specif. prem. |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
5.0% |
Cost of Equity |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
20.0% |
WACC |
17.8% |
17.9% |
18.4% |
18.5% |
18.5% |
18.5% |
18.5% |
18.5% |
18.5% |
18.5% |
WACC to Perpetuity |
18.5% |
|
|
|
|
|
|
|
|
|
Source: Company data, Concorde Capital estimates