Agriculture

Coming back from Landkom’s operations, we decided to update our recent valuation of Landkom because of our improved outlook on financing availability and 2010–2011 operational results. We consider that stocks in Landkom though risky provide investors with high yield investment opportunity. We recommend BUYing stocks in Landkom with a fair price at USD 0.19 per share.

With this report, we decided to introduce the most promising Ukrainian agricultural companies that, in our view, have a winning combination of the strongest positions on the Ukrainian market, together with good corporate governance and a well-build business structure.

Earlier this week the ESGroup hosted a conference with all the major players in the agricultural sector of Ukraine’s economy. Among the participants were Anatoly Kinakh, the President of the Ukrainian Union of Manufacturers and Entrepreneurs, and Yuriy Luzana, the Deputy Minister of Agriculture.

На прошлой неделе Холдинг Астарта объявила о своих стратегических планах на 2008-2012. Компания собирается ввести в эксплуатацию новый элеватор до конца 2011 года и инвестировать в общей сложности 50-60 млн. долл. в модернизацию сахарных заводов. Кроме того, Астарта планирует увеличить производство сахара на 29-42% до 200-220 тыс. тонн в 2008 году и расширить свой земельный банк с нынешнего 160 тыс. га до 180-185 тыс. га в 2009 году. Указанные цифры соответствуют нашим ожиданиям, поэтому наши основные предположения остаются неизменными. Тем не менее, мы понижаем нашу целевую цену из-за использование для акций украинских компаний в моделях DCF более высокой risk free rate - 8,6% (ранее 6,1%). Наша новая целевая цена составляет 25.2 USD с потенциалом роста 165,3%. Мы подтверждаем нашу рекомендацию ПОКУПАТЬ.

Astarta, a dynamically growing vertically integrated agro-holding with a diversified business structure, has aggressively expanded its land bank by 30% CAGR over last four years. This leaves room for more expansion, which we estimate at 26% CAGR over the next five years. Excellent corporate governance, strong financial results and expanding operational margins are constantly enriching the value of the company’s stock. We reiterate our recommendation to BUY with a fair price of USD 29.9.

Mriya [MAYA GR, BUY] has placed five-year Eurobonds worth USD 250 mln, with a 10.95% coupon and at a yield of 11.25%.

Mriya [MAYA GR, BUY] has resumed its debut Eurobond issue on Monday, March 21. Recently, Fitch & S&P have assigned “B-” and “B” ratings to the planned Eurobond issue. The planned volume of the issue is USD 300 mln.