Fitch confirms MHP’s rating at country ceiling

Обзор облигаций 11.10.2012 Fitch Ratings confirmed the credit rating of Ukraine’s poultry market leader MHP (MHPSA) at ‘B’ with a stable outlook yesterday. The agency noted the rating was capped by Ukraine’s sovereign rating. The agency cited the company’s outperformance of Fitch expectations in both 2011 and 2012, as well as expected improvement in leverage due to the completion of large capex projects as the main factors that support the rating. The key risk agency analysts saw was currency risk as the hryvnya dominates MHP’s operations, while a significant part of its debt is in foreign currency. Alexander Paraschiy: The rating confirmation was of little surprise as the company demonstrated healthy operational and financial performance (on favorable chicken prices) in 1H12, and a further increase in sales and profits is expected next year as the company is close to increasing its poultry production by about 1.5x yoy at the newly built Vinnitsa factory. Although we warn on execution and market risk related to the commissioning of this new facility, we remain bullish on MHPstock.