Ukraine Sugar Prices Up 7% Last Week

Обзоры по компаниям и отраслям 13.06.2013 News Sugar prices in Ukraine rose by 6.8% last week to UAH 5,600 per tonne, Kyiv business daily Commersant reported on Tuesday, citing data from the APK tracking agency. The growth was attributed to seasonal factors and an expected drop in sugar production this year. As we wrote on May 23, Agriculture Minister Mykola Prysiazhnuk expects a 36% YoY fall in domestic sugar production to 1.40mn tonnes in 2013/2014 marketing year. According to the latest data from the Agriculture Ministry, Ukrainian farmers have sown about 306,000 hectares with sugar beet this year, down from 540,000 ha in 2012. Commentary Due to plentiful domestic production and strict import quotas, Ukraine has a stand-alone market for sugar, with prices moving independently from the global commodities markets. Astarta, Ukraine’s largest sugar producer with a 19% market share, is a prime beneficiary of rising domestic sugar quotes, and the company’s share price has ballooned by more than 40% over the last 3 months. In the past week alone, the AST stock is up 15.4%, outperforming the WIG-20 by 13.8 p.p. We forecast that sugar prices will further increase by 10% -15% through the end of the year. We have a BUY recommendation for Astarta with a target price of PLN 96 per share, implying an upside of 47%. Eavex Capital welcomes any questions or comments you may have regarding our research products. Please contact our office in Kyiv at 380-44-590-5454, or by email: Alexander Klymchuk, Head of Sales, a.klymchuk@eavex.com.ua Dmitry Churin, Head of Research, d.churin@eavex.com.ua