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Concorde Capital Research: Avangardco improves its P&L in 2017

March 29, 2018 | Cbonds

Ukraine's largest egg producer Avangadrco (AVGR LI, AVINPU) reported a 33% yoy drop in consolidated revenue to USD 127.9 mln, according to its March 29 release. Without grain trading operations, its revenue decreased 16% yoy to USD 118.1 mln (grain trading contributed USD 9.7 mln in 2017 vs. USD 50.2 mln a year ago). The revenue decrease was driven by a 13% yoy average egg selling price drop to UAH 1.17/egg (or 17% yoy to USc 4.4), which was partly offset by a 23% yoy increase in egg sales to 1.87 bln units. Shell egg export more than doubled to 558 mln units. Sales of dry egg products fell 48% yoy to 3,264 t and their average selling price slid 23% yoy to USD 4.30/kg.

The company’s EBITDA surged 7.3x yoy to USD 12.0 mln in 2017, while its net loss was USD 7.5 mln in 2017 vs. a USD 56.6 mln net loss in 2016. Avangardco’s operating cash flow before working capital changes plunged 96% yoy to USD 0.85 mln in 2017. The company’s working capital investments were USD 20.8 mln in 2016, while CapEx plummeted 88% yoy to USD 1.6 mln in 2017. Its net debt stood at USD 347.8 mln as of end-2017, implying net debt to EBITDA of 29x.

The company reported it would not hold any conference call on the results due to the ongoing discussions with the ad hoc committee of bondholders.

Andriy Perederey: Avangardco's improved EBITDA margin is clearly a positive development, but the profit being generated still does not enable servicing its debt. Another positive sign is termination of non-core grain trading operations since 2H17, which disturbed the company’s P&L in 2016 and 1H17. It’s also good to hear that the company is in active restructuring talks with its key bondholders, but we do not expect any positive news on that side. All in all, we retain our view that Avangardco securities are not investable.

Issue: Ukrlandfarming, 10.875% 26mar2018, USD

StatusDefaultCountry of riskMaturity (option)AmountIssue ratings (M/S&P/F)
redemption defaultYesUkraine03/26/2018500,000,000 USD-/NR/Withdrawn

Company: Ukrlandfarming

Full company nameUkrlandfarming Public Limited Company
Country of riskUkraine
Country of registrationCyprus


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