Agriculture

June 17, 2016
 

Ovostar’s EBITDA fell 22% YoY in 1Q16 to USD 6.9mn despite a 10% growth in gross profit from sales of egg and egg products to USD 8.4mn. Apart from lower VAT subsidy and higher SG&A cost, the main reason for drop in EBITDA was gross loss from sales of non­core poultry meat of USD 1.0mn in 1Q16 vs. gross profit of USD 1.4mn in 1Q15. The unexpected non­core loss in 1Q16 along with low egg prices over Mar­May led us to revise our FY16 EBITDA forecast to USD 40mn. The updated target price of PLN 117.65 still suggests a BUY rating.