Agriculture
September 15, 2011
Yesterday’s announcement by Avangard Chairman Oleg Bakhmatiuk that he will merge the company with his UkrLandFarming agricultural holding presents an opportunity for investors to get in early on a lucrative forthcoming IPO of the combined entity. In the meantime, we reiterate our BUY rating for Avangard’s equity, as well as its bonds. The bonds currently yield 13.7%, implying an unjustified spread of 302 bps over MHP-15s, while the AVGR stock trades at 2011E P/E of 3.7x and 2011E EV/EBITDA of 3.7x, very attractive levels for a business that will generate some USD 200mn in net profits in 2011.
