Agriculture
December 23, 2014
Avangard has reported poor 9M14 earnings, with a net loss of USD 6mn and EBITDA down 47% YoY to USD 109mn. While the near-shutdown of production assets in the war-hit Donbass and the hryvnia devaluation partly justify such results, we have concerns on the company’s reported egg pricing and cost dynamics, as well as its puzzling flock reduction outside the Donbass. Although we believe Avangard has the ability to repay its Eurobonds due next October, we doubt its willingness make the redemption. Even after the 75% drop in the AVGR price observed since July, we reiterate our HOLD recommendation for the issue, and lower our TP to USD 2.66.
