Agriculture
March 03, 2015
A hedging-based approach to doing business and U-turn in its farming segment enabled Kernel to report record-high EBITDA in 2Q15 (Oct-Dec’14) despite sluggish grain and sunflower oil pricing. EBITDA surged by 2.5x YoY to USD 142mn, with the farming segment contributing USD 44mn (after a USD -42mn in 2Q14). Applying a rather conservative EBITDA forecast of USD 325mn for FY15, Kernel is now trading at EV/EBITDA of 4.4x, indicating to us KER stock is being overlooked by the market. Given its historical ratio of 6.2x and applying a 10% discount for Ukraine political risk (Kernel has no exposure to the war-hit Donbass region), we derive a fair value of PLN 50.20.
