Agriculture
February 02, 2011
Agroton: Curb Your Enthusiasm - The positive reaction from investors following Agroton’s October 2010 IPO has driven the company’s share price to a level which we believe fully values its fundamental potential. We forecast that Agroton’s net profit will grow at a 2011-2015 CAGR of 43%, reaching USD 48.1mn in 2015 with a net margin of 25%. Despite this positive outlook, Agroton trades at 2011E EV/EBITDA of 10.5x, which implies a 37% premium over its peers’ median. Our DCF valuation yields a fair value for the company of USD 11.58 per share. We therefore initiate coverage of Agroton with a SELL recommendation and a target price of USD 11.45 ps, implying a downside of 22%.
