Ovostar’s EBITDA to fall yoy, Concorde Capital projection

Ovostar Union’s EBITDA will fall yoy in 2018, even though in 9M18 it reported a 42% yoy EBITDA surge, Alexander Paraschiy, Head of Research at Concorde Capital, informs.

The results imply Ovostar’s 4Q18 revenue reached USD 29.5 mln (down 24% yoy) and its 2018 revenue was USD 124 mln (up 26% yoy).

"The weak 4Q18 operating results look worrying as the fourth quarter is typically the strongest for egg prices and sales in Ukraine. For instance, in 2016-2017, Ovostar generated 31%-39% of annual revenue and 41%-54% of annual EBITDA in the last quarter. This time, it looks like the 4Q contribution to the company’s annual revenue will be less than 25%, while the quarter’s contribution to EBITDA will be also rather weak," Alexander Paraschiy notes.

Concorde Capital analysts expect a negative market reaction to the company’s trading update, yet they keep an overall neutral view on Ovostar stock.

In 2018, Ovostar Union sales volume in the egg segment grew by 16% and reached 1 381 mln eggs (2017: 1 195 mln). Export share remained at the level of the previous year, which is 43%.

The new infographic guide Agribusiness of Ukraine 2017/18 is available by the link.