Avangardco boosts egg production 12% in 2013

Обзоры по компаниям и отраслям 13.02.2014 Europe’s leading egg producer, Ukrainian company Avangardco (AVGR LN, AVINPU), boosted its total production of shell eggs 12% yoy to 7.02 bln units, the company reported on Feb. 12. Its output growth was explained by a gradual commissioning of the company’s brand new factories that enabled it to increase its laying hens flock 18% yoy to 27 mln as of end-2013. The company also reported a 73% yoy surge in shell egg processing into dry egg products (to 1.86 bln units), which was attributed to capacity expansion at its processing plant. Higher processing volumes caused shell egg sales to drop 2% yoy to 5.09 bln in 2013. The average price of sold shell eggs decreased 1% yoy to UAH 0.69 per unit in 2013. The price of dry egg products declined more visibly by 6% yoy to USD 7.64/kg. The full-year result implies the company improved shell egg production 19% yoy and 9% qoq to 1.90 bln units in 4Q13. It also was able to increase sales of shell eggs 1% yoy and 9% qoq to 1.35 bln in the quarter. The achieved egg price improved 16% qoq, but declined 5% yoy to UAH 0.80/unit in 4Q13. Avangard’s egg processing volumes rose 2.1 times yoy to 596 mln units in 4Q13. Alexander Paraschiy: The company’s achieved egg price in 4Q13 slightly disappoints us – we expected more than 25% qoq growth. Otherwise, Avangardco’s results offered few surprises. Based on the provided numbers, we expect Avangardco will report the following full-year 2013 numbers: net revenue of USD 660 mln (+5% yoy, 5% below consensus), EBITDA of USD 298 mln (+6% yoy, 2% above consensus) and net income of USD 250 mln (+10% yoy, 15% above consensus). Based on the announced dividend policy for 2014, we expect Avangardco will offer a USD 1.0 dividend per DR in dividnds this year, which would imply a dividend yield of 9% at the current market price. The company’s FY2013 net debt/EBITDA ratio will remain as low as 0.7x, or much below the Eurobond covenant of 3.0.