Agriculture

June 15, 2016
 

We are lowering our forecast for Kernel’s FY16 EBITDA to USD 351mn from USD 401mn previously on more conservative projections for the group’s seed­crushing and grain resale margins. Robust competition for sunflower seeds squeezed Kernel’s crushing margin by 12% QoQ to USD 105/t over Jan­Mar 2016, and we expect margin to average at USD 98/t for FY16 vs. USD 187/t in FY15. Kernel’s grain trading margin also fell by 11% YoY in Jan­Mar despite Ukraine’s renewal of refunds of grain export VAT in early 2016. Our revised TP for the KER stock is PLN 61.80 which justifies a continued BUY rating.