Ovostar posts expectedly strong 3Q13 results

Обзоры по компаниям и отраслям 15.11.2013 Ukrainian egg producer Ovostar Union (OVO PW) reported a 34% yoy increase in its 9M13 revenue to USD 54.0 mln. The growth was driven mostly by 58% yoy revenue growth in its second-biggest segment, egg products. Revenue in its key segment, shell eggs, increased 26% yoy in 9M13. The company’s 9M13 EBITDA increased 11% yoy to USD 17.7 mln (while in 1H13, EBITDA declined 28% yoy). The company’s bottom line improved 5% yoy in 9M13 to USD 14.9 mln. The 9M13 result implies Ovostar had a strong third quarter: its 3Q13 revenue increased 67% yoy to USD 20.9 mln, with its shell egg segment being the key growth driver. That segment’s 9M13 revenue surged 79% yoy, fueled by 53% growth in volume sold and better prices. The company’s EBITDA margin was 39% in the quarter (vs. 29% in 1H13 and 23% in 3Q12). Ovostar’s quarterly EBITDA amounted to USD 8.3 mln, or 75% higher than the average for the first two quarters and 4x higher yoy. Alexander Paraschiy: The company’s strong 3Q financial results are not a surprise since Ovostar reported on significant improvement in its shell egg prices and volumes in its operating update released in October (refer to our news of October 23). As we expected, the company reported strong profit before tax in its shell egg segment (USD 6.26 mln, or 26% more than in the two previous quarters aggregately), while we are also impressed that it was able to report strong profit before tax in its egg products segment in 3Q13: USD 1.85 mln, or the same amount as in 1H13. We expect the company’s 4Q13 will be even stronger in terms of sales and profits, as the company will continue to increase its output by loading new capacities, will definitely enjoy better egg pricing (currently, Ukraine’s egg prices are better than in 3Q13 and 4Q12 by more than 30%) and enjoy lower pricing for grains, its key cost item. We see Ovostar as one of most attractive growth stories currently.