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Contents 1. Recommendation 2. Astartas snapshot 3. Competitive - - PowerPoint PPT Presentation

Jun 13, 2023 338 likes •837 views

Contents 1. Recommendation 2. Astartas snapshot 3. Competitive advantages 4. Deficit in Sugar Market 5. Forecasts 6. Value drivers 7. Valuation Contents 1. Recommendation 2. Astartas snapshot 3. Competitive advantages 4. Deficit in

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SLIDE 1

Contents

  • 1. Recommendation
  • 2. Astarta’s snapshot
  • 4. Deficit in Sugar Market
  • 5. Forecasts
  • 7. Valuation
  • 3. Competitive advantages
  • 6. Value drivers
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SLIDE 2

Contents

  • 1. Recommendation
  • 2. Astarta’s snapshot
  • 4. Deficit in Sugar Market
  • 5. Forecasts
  • 7. Valuation
  • 3. Competitive advantages
  • 6. Value drivers
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SLIDE 3

 Recommendation: BUY  Upside: 17.7 % Target Price 24,6 eur=98,28 pln

20 40 60 80 100 120 16.08.06 16.02.07 16.08.07 16.02.08 16.08.08 16.02.09 16.08.09 16.02.10 16.08.10

AST Target Price

  • 1. Recommendation

2

Source: WSE, BI-5 estimates

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SLIDE 4

ASTARTA’s Business Description

Astarta-Kiev is a vertically integrated holding 190 thousand hectares under lease 5 production units

72% 19% 8% 1% Sugar Crops Cattle farming Other

Breakdown of Revenues, 2010

  • 2. Astarta’s Snapshot

3

Source: Astarta-Kiev

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SLIDE 5

 90 % of own sugar beet production; Diversified portfolio strategy; Modernization and expansion of assets Pricing power implies 7% premium

ASTARTA ‘s benefits:

Plants’ capacities Yields Gas consumption

  • 3. Competitive advantages

4

Source: Astarta-Kiev

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SLIDE 6
  • 4. Deficit of Sugar Production in Ukraine

500 1000 1500 2000 2500 3000 2005 2006 2007 2008 2009 2010 2011Е Тotal sugar production in Ukraine,th.tons Total output of Astarta's sugar,th.tons Тotal sugar consumption in Ukraine,th. tons

Deficit in sugar market

5

Source: State Statistic Committee of Ukraine

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SLIDE 7
  • 5. Forecasts

175,7 239,5 320,1 382,8 460,4 547,1 76,0 75,5 104,7 129,1 158,5 184,5

2010E 2011E 2012E 2013E 2014E 2015E Revenues, th. euro Net profit, th. euro Net profit margin,%

6

Source: BI-5 estimates

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SLIDE 8
  • 6. Astarta’s main value drivers

Production volumes growth 193 million EUR Capex program Financial solvency

Reinforcing its market position

7

Source: Astarta-Kiev

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SLIDE 9
  • 7. Valuation

DCF Model

BUY

Perpetuity growth = 4 %

Upside=17,7% Target Price= EUR 24,6

WACC in perpetuity = 13 %

8

Source: BI-5 estimates

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SLIDE 10

CONTENTS

Growth in basic confectionary Market Based Valuation Market Share Expansion Tough situation in world sugar market Solid demand in world sugar market Bioethanol production projections Biodiesel production projections Situation in Ukrainian milk market Average Gas consumption Crop yields Astarta vs. Ukraine Expansion and Modernization Cost of Equity Calculation Discounted FCFFs Basis for DCF-analysis Cash Flow Statement Income Statement Growth Provision Growth Potential Balance Sheet Key Targets Assets geography Astarta’s Structure Astarta’s Production Astarta’s Achievements in the Dairy Sector GDP and inflation forecasts Profitabibility margin Ratios Forecast of costs Forecast of prices Investment risks Astarta’s consumers

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SLIDE 11

Company’s snapshot

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SLIDE 12

Assets geography

  • Globyno sugar plant

sugar beet processing capacity: 5,500 t/day

  • Veselopodilsky sugar plant

sugar beet processing capacity: 3,000 t/day

  • 17,500 of cattle
  • 130 ths ha of agricultural land
  • Kobelyaky sugar plant

sugar beet processing capacity: 7,000 t/day

  • Yaresky sugar plant

sugar beet processing capacity: 4,500 t/day

  • 27 ths ha of agricultural land
  • Zhdanivsky sugar plant

sugar beet processing capacity: 3,200 t/day

  • 3,000 of cattle
  • 31 ths ha of agricultural land
  • Narkevychi sugar plant

sugar beet processing capacity: 3,800 t/day

  • 3,500 of cattle

11

Source: Astarta- Kiev

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SLIDE 13

Astarta’s Structure

Astarta Holding N.V. (the Netherlands) ANCOR Investments Limited (Cyprus) LLC Firm “Astarta- Kyiv” (Ukraine) LLC «Volochysk- Agro» LLC Agricultural company «Dovzhenko» LLC IPC «Poltavazernopr

  • duct

LLC Agricultural company «Dobrobut LLC «Khmilnytske»

12

Source: Astarta-Kiev

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SLIDE 14

Astarta’s Production (ths tons)

200 400 600 800 1000 1200 1400 1600 1800 2005 2006 2007 2008 2009 Milk Grain and oil crop Sugar

13

Source: Astarta-Kiev

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SLIDE 15

Astarta’s Achievements in the Dairy Sector

10 20 30 40 50 60 10 20 30

2005 2006 2007 2008 2009 2010

Heads of cattle,ths heads Heads of cows, ths heads Milk production, ths tons ths heads ths tons

14

Source: Astarta-Kiev

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SLIDE 16

Industry perspectives

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SLIDE 17

GDP and Inflation Forecasts

0,5 1 1,5 2 2,5 3 3,5 4 4,5 5

9,4 9,6 9,8 10 10,2 10,4 10,6 10,8 11 11,2 2010 2011 2012

Ukraine GDP Inflation rate Inflation rate GDP Growth

16

Source: World Bank, BI-5 estimates

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SLIDE 18
  • 15
  • 10
  • 5

5 10 15 20 25 30 35 2004 2005 2006 2007 2008 2009 sugar beet crops and oilseeds

Profitability margin, %

17

Source: Ukrstat

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SLIDE 19

Growth in Production of Basic Confectionary in Ukraine

200 400 600 800 1000 1200

2005 2006 2007 2008 2009 2010

Sweet biscuits and wafers, tons Sugary foods containing cocoa, tons Sugary products without cocoa, tons

18

Source: Ukrkonditer

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SLIDE 20

31 32 33 34 35 36 37 38 39

20 40 60 80 100 120 140 160 180

2008-2009 2009-2010 2010-2011 stocks (mln ton) prod (mln ton) cons (mln ton) ratio %

Tough situation in world sugar market

mln ton %

19

Source: FAO

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SLIDE 21

1 Solid demand in world sugar market

1 860 1 870 1 880 1 890 1 900 1 910 1 920 1 930 1 940

  • 4,0
  • 2,0

0,0 2,0 4,0 6,0 8,0 10,0 2009 2010 2011 2012

world gdp growth rate developing countries gdp growth rate population growth, million mln

growth rate

20

Source: World Bank

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SLIDE 22

Ethanol production (mln m3 )

20 40 60 80 100 120 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Brazil EU

21

Source: USDA

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SLIDE 23

Biodiesel production (mln m3)

2 4 6 8 10 12 14 16 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Ukraine, Russia Brazil EU

22

Source: USDA

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SLIDE 24

Situation in Ukrainian Milk Market

0,5 1 1,5 2 2,5 3 3,5 4 4,5 2 4 6 8 10 12 2004 2005 2006 2007 2008 2009

Milk Production by Dairy farms (mln tons) Milk Production by Households (mln tons) Number of Cows (mln heads)

mln tons mln heads

23

Source: State Statistic Committee of Ukraine

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SLIDE 25

Competitive advantages

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SLIDE 26

Average natural gas consumption (cubic meters per ton of beet processed)

10 20 30 40 50 60 70 2007 2008 2009

Ukraine Astarta

25

Source: Astarta-Kiev

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SLIDE 27

Crop yields Astarta vs. Ukraine (average 2007-2009)

5 10 15 20 25 30 35 40 45 50 Sugar beet Wheat Barley Corn Sunflower Soybeans

Astarta average Ukraine average

26

Source: Astarta-Kiev

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SLIDE 28

OUTLOOK

slide-29
SLIDE 29

EUR 193 million Capex program for 2010-2015

Land bank expansion Equipment fleet strengthening The number of livestock growth New companies acquiring Biomass methanization

Expansion and Modernization 28

Source: Astarta-Kiev

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SLIDE 30

Market Share Expansion

Astarta's Share in 2009

2%

Increase from 2% to 5% until 2015 Increase from 17,7% to 25% until 2015

Astarta's Share in 2009

17,7%

Astarta's Share in 2015E

25%

Astarta's Share in 2015E

5%

Sugar Market Raw Milk Market

29

Source: Astarta-Kiev

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SLIDE 31

1 2 3 Key Targets

1800 4000 2000 4000 6000 2010E 2015E

Sugar beet harvested, ths tonnes

280 600 500 1000 2010E 2015E

Sugar produced, ths tonnes

50 100 50 100 150 2010E 2015E

Milk production, ths tonnes

350 1000 500 1000 1500 2010E 2015E

Grain and oil crops harvested, ths tonnes

200 300 50 100 150 200 250 300 350 2010E 2015E

Land in operation, ths ha

4 5 30

Source: Astarta-Kiev

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SLIDE 32

VALUATION

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SLIDE 33

0,0 20,0 40,0 60,0 80,0 100,0 120,0 140,0 160,0 2011E 2012E 2013E 2014E 2015E

Operating cash flows

Millions of Euro

Sufficient for debt burden reduction

Growth Potential

Strong cash generating power

32

Source: BI-5 estimates

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SLIDE 34

Growth Provision

43 36 37 63 36 10 20 30 40 50 60 70 2011E 2012E 2013E 2014E 2015E

Capex

Millions

  • f Euro

46 56 50 59 66 20 40 60 80 2011E 2012E 2013E 2014E 2015E

Change in Working Capital

Millions

  • f Euro

33

Source: BI-5 estimates

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SLIDE 35

11,4 12,1 13,1 13,7 13,8 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 2011E 2012E 2013E 2014E 2015E

Debt Ratio Reduction's effect on WACC

Debt ratio WACC

Cost of debt, % 6,5 Cost of Equity, % 13,8 Risk-free Rate, % 6,8 Beta 0,62 Perpetuity Growth, % 4 WACC in perpetuity, % 13

Basis for DCF-analysis 34

Source: BI-5 estimates

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SLIDE 36

10 20 30 40 50 60 2011E 2012E 2013E 2014E 2015E

Discounted FCFFs at January 1, 2011

Millions of Euro

Discounted FFCFs

Enterprise Value, EUR '000 739637 Less net debt, EUR '000

  • 124901

Equity value, EUR '000 614736 Target price on January 1, 2011 24,6 Upside, % 17,7

35

Source: BI-5 estimates

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SLIDE 37

CAPM

21,9%

Build-up Method

Risk-free rate Company Specific Risk Equity Risk Premium 6,8% 6% 1% 13,8%

1 2

Cost of Equity Calculation 36

Source: BI-5 estimates

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SLIDE 38

Market Based Valuation

P/E P/BV P/CF EV/EBITDA EV/EBIT

Astarta Holding N.V. 6,9 2,7 13,4 7,5 8,2 Delta Sugar Co 8,6 2,8 5,9 5 5,4 Ebro Foods S.A. 15,8 2 11,4 10,9 13,6 Maryborough Sugar Fabryc 14,5 1,2 28 17 29,2 Olam International Ltd 19,4 3,6 16,4 13,4 15 Suedzucker AG 16,3 1,3 7,2 7,5 11,5 Tate & Lyle 11,9 3 8,8 7,9 10,5 MEDIAN 15,2 2,4 10,1 9,4 12,6 Valuation Method International Peers' Median Multiple Target Price Upside P/E 15,2 45,9 119,6 P/BV 2,4 18,4

  • 12,0

EV/EBITDA 9,4 32,1 53,5

Generally, multiples show that Astarta’s stocks are undervalued Relative valuation methods mostly confirm results of DCF analysis

37

Source: Infinancials, BI-5 estimates

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SLIDE 39

Financial Analysis

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SLIDE 40

Forecast of prices (eur per ton)

100 200 300 400 500 600 700 800 2010 2011 2012 2013 2014 2015

Sugar Milk Grain

39

Source: BI-5 estimates

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SLIDE 41

Forecast of Costs

50 100 150 200 250 300 350

2010 E 2011 E 2012 E 2013 E 2014 E 2015 E

Sugar (th. EUR) Crops (th. EUR) Cattle farming (th. EUR) Other (th. EUR)

40

Source: BI-5 estimates

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SLIDE 42

Activity Ratios 2007 2008 2009 2010E 2011E 2012E 2013E 2014E 2015E Inventory turnover 1,37 1,80 1,28 1,28 1,24 1,23 1,17 1,20 1,23 Days of inventory on hand 266,83 203,29 285,49 284,44 294,02 297,06 310,80 304,26 296,56 Receivables Turnover 6,69 16,83 16,45 17,47 16,39 16,25 15,47 15,51 15,43 Days of sales outstanding 54,52 21,68 22,19 20,89 22,27 22,46 23,59 23,53 23,66 Payables turnover 6,67 14,13 12,87 18,04 15,79 15,81 15,09 15,23 15,23 Number of days of payables 54,68 25,83 28,36 20,23 23,11 23,09 24,19 23,97 23,96 Working capital turnover 1,29 1,69 1,49 1,34 1,20 1,28 1,26 1,28 1,30 Total asset turnover 0,60 0,71 0,59 0,61 0,61 0,67 0,68 0,69 0,67 Liquidity Ratios Current ratio 1,51 0,92 2,15 2,94 3,33 4,24 6,17 8,74 10,14 Quick ratio 0,35 0,21 0,37 0,35 0,38 0,48 0,68 0,95 2,49 Cash ratio 0,02 0,05 0,04 0,03 0,02 0,02 0,03 0,03 1,60 Defensive interval ratio 135,73 76,07 89,31 74,06 69,97 64,65 64,11 60,69 110,47 Cash conversion cycle 266,66 199,14 279,31 285,10 293,18 296,44 310,20 303,83 296,26 Solvency Ratios Total debt ratio 0,30 0,53 0,37 0,36 0,30 0,20 0,09 0,00 0,00 Debt/Equity ratio 0,52 1,60 0,73 0,66 0,49 0,29 0,10 0,00 0,00 Debt/Capital ratio 0,34 0,62 0,42 0,40 0,33 0,22 0,09 0,00 0,00 Interest coverage 4,98 3,15 4,51 8,47 5,97 7,69 11,08 26,35 565,51 Profitability Ratios Gross profit margin 28,04 28,08 32,39 41,93 43,30 43,40 43,17 42,11 40,28 Net profit margin 26,26

  • 6,15

24,55 43,26 31,52 32,71 33,73 34,44 33,72 ROA 15,79

  • 4,38

14,38 26,34 19,28 21,86 22,88 23,88 22,51 ROE 28,65

  • 12,72

32,60 60,01 45,92 48,31 45,90 43,97 40,74

Ratios 41

Source: BI-5 estimates

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SLIDE 43

Income Statement 42

Source: Company Data, BI-5 estimates

2008 2009 2010 E 2011E 2012E 2013E 2014E 2015E Revenues 123 382 117 718 175 690 239 543 320 139 382 800 460 419 547 112 CoGs: 96 262 77 861 102 029 135 831 181 207 217 530 266 545 326 762 Gross profit 103 712 138 933 165 270 193 874 220 350

  • Changes in fair value of biological

assets

  • 31 000

13 628 27 105 5 770 5 770 5 770 5 770 5 770 Other operating income 11 661 7 151 7 000 7 260 7 260 7 260 7 260 7 260 General and administrative expense 11 959 8 114 9 163 10 489 12 046 13 752 15 671 17 853 Selling and distribution expense 6 926 5 654 8 645 11 787 15 753 18 836 22 655 26 921 Other operating expenses 5 949 4 766 3 776 3 776 3 776 3 776 3 776 3 776 Profit from operations 21 443 40 379 86 182 90 689 120 388 141 935 164 801 184 829 Net financial expense 41 714 11 822 10 175 15 195 15 665 12 807 6 255 327 Financial income 406 343

  • Other income (expense)

111 258

  • Gain on asquisition of subsidiaries

8 951 172 000

  • Profit (loss) before tax
  • 10 803

29 330 76 006 75 494 104 723 129 128 158 546 184 502 Income tax (loss) benefit 3 209

  • 425
  • Net profit (loss)
  • 7 594

28 905 76 006 75 494 104 723 129 128 158 546 184 502

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SLIDE 44

Balance sheet 43

Source: Company Data, BI-5 estimates

2008 2009 2010 E 2011Е 2012Е 2013Е 2014Е 2015Е PP&E 72 717 105 495 129 611 150 526 162 877 175 164 212 471 220 510 Biological assets 5 150 12 747 17 059 29 379 41 699 54 019 66 339 78 659 Other 5 796 5 601 4 843 4 931 4 957 5 099 5 203 5 314 Non-current assets 83 663 123 843 151 513 184 836 209 534 234 282 284 013 304 483 Inventories 55 372 66 429 92 590 126 242 168 717 201 739 242 646 288 334 Biological assets 14 620 19 962 81 263 94 518 109 935 127 866 148 722 172 981 Trade accounts receivable 6 567 7 744 12 370 16 865 22 540 26 951 32 416 38 520 Cash and cash equivalents 949 1 930 1 722 1 722 1 722 1 722 1 722 96 739 Other 12 521 8 435 9 275 10 199 11 215 12 333 13 563 14 915 Current assets 90 029 104 500 197 220 249 545 314 128 370 612 439 069 611 488 ТOTAL ASSETS 173 692 228 343 348 733 434 381 523 662 604 894 723 082 915 971 Total equity 57 611 115 512 191 518 267 013 371 735 500 863 659 409 843 911 Long-term loans and borrowings 11 897 52 436 78 302 80 724 65 997 32 234 1 684 Other 6 777 11 765 11 765 11 765 11 765 11 765 11 765 11 765 Non-current liabilities 18 674 64 201 90 067 92 489 77 762 43 999 13 449 11 765 Short-term loans and borrowing 74 834 20 847 31 130 32 093 26 238 12 815 670 Current portion of long-term loans and borrowings 5 683 11 512 17 191 17 722 14 489 7 077 370 Trade accounts payable 8 169 3 932 7 378 9 823 13 104 15 730 19 275 23 629 Other 8 721 12 339 11 449 15 242 20 333 24 409 29 909 36 666 Current liabilities 97 407 48 630 67 148 74 880 74 164 60 031 50 223 60 295 TOTAL EQUITY AND LIABILITIES 173 692 228 343 348 733 434 381 523 662 604 894 723 082 915 971

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SLIDE 45

Cash Flow Statement 44

Source: Company Data, BI-5 estimates

2008 2009 2010 E 2011E 2012E 2013E 2014E 2015E

(Loss) profit before tax

  • 10 803

29 330 76 006 75 494 104 723 129 128 158 546 184 502

Adjustments for Depreciation and amortization

9 450 8 178 7 897 9 702 11 267 12 192 13 112 15 904

Interest expense

7 131 8 203 10 175 15 195 15 665 12 807 6 255 327

(Loss) gain from changes in fair value of biological assets

31

  • 13 628
  • 61 301
  • 13 255
  • 15 417
  • 17 931
  • 20 856
  • 24 258

Increase in inventories

  • 26 474
  • 13 070
  • 26 161
  • 33 651
  • 42 475
  • 33 023
  • 40 906
  • 45 688

Increase (decrease) in trade and other receivables

  • 2 078
  • 2 378
  • 5 465
  • 5 420
  • 6 691
  • 5 530
  • 6 695
  • 7 456

Increase (decrease) in other long-term assets

153

  • 516

758

  • 88
  • 26
  • 142
  • 104
  • 111

Increase (decrease) in trade and other payables

6 997 815 2 764 6 237 8 373 6 703 9 044 11 111

Interest paid

  • 6 811
  • 8 952
  • 10 175
  • 15 195
  • 15 665
  • 12 807
  • 6 255
  • 327

Other

  • 50 110

6 149

  • Cash flows (used in) provided by
  • perating activities
  • 1 576

14 131

  • 5 503

39 020 59 754 91 397 112 141 134 004

Purchase of property, plant and equipment, intangible assets and other non-current assets

  • 38 133
  • 10 362
  • 36 324
  • 42 937
  • 35 939
  • 36 798
  • 62 738
  • 36 264

Other

  • 5 597

5 213

  • Cash flows used in investing activities
  • 43 730
  • 5 149
  • 36 324
  • 42 937
  • 35 939
  • 36 798
  • 62 738
  • 36 264

Proceeds from loans and borrowings

101 975 34 821 41 828 3 917

  • Principal payments on loans and

borrowings

  • 51 773
  • 41 680
  • 23 815
  • 54 599
  • 49 402
  • 2 724

Other

2 388

  • 990
  • 208
  • Cash flows provided by financing

activities

52 590

  • 7 849

41 620 3 917

  • 23 815
  • 54 599
  • 49 402
  • 2 724

Net increase (decrease) in cash and cash equivalents

7 096 1 133

  • 208
  • 95 017

Cash and cash equivalents as at 1 January

1 068 949 1 930 1 722 1 722 1 722 1 722 1 722

Currency translation difference

  • 7 215
  • 152
  • Cash and cash equivalents as at 31

December

949 1 930 1 722 1 722 1 722 1 722 1 722 96 739

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SLIDE 46

Investment Risks

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SLIDE 47

Astarta’s main consumers of sugar, 2010

Traders 22% Other Industrial 30% Konti 26% AVK 9% Coca-Cola 7% Sandora 6%

46

Source: Astarta-Kiev

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SLIDE 48

Investment Risks

High Moderate Low

Climate risk Regulation risks Foreign exchange risk Costs surge risk Market risk

47

Source: BI-5 estimates