Weekly report February 19, 2017

19 February 2017

Grains prices in Ukrainian ports are at the highest levels since the start of current season, skyrocketing iron ore prices in China, market capitalization of Ferrexpo reached USD 1.25 bln.

Stocks

Largest Ukrainian companies share prices weekly dynamics
Company Currency Price Weekly change, % Monthly change, %
MHP USD 9.0 1.1% 0.0%
Kernel PLN 77.5 -1.8% 4.9%
Ferrexpo GBx 171.4 5.2% 30.7%
Astarta PLN 60.5 -1.8% 0.8%
Ovostar PLN 91.5 0.0% 7.6%
IMC PLN 9.00 0.6% 7.1%

Following surge of iron ore price in the beginning of the week, share price of Ferrexpo kept growing as well (+5.2% vs. previous week close, current market capitalization of the company is about USD 1.25bln).

In January 2017 Ferrexpo decreased total pellets output by 11.8% vs. corresponding period of previous year. We see that main reasons of it were high base of previous year and focus of the company on premium production with highest margins, so, on our opinion, it will not have significant impact on financial results of Q1 2017, which are to be quite good. We estimate that at iron ore price at about USD 80/t monthly EBITDA of Ferrexpo is close to USD 50M.

Share price dynamics of Ferrexpo during last period of time looks as follows:

Ferrexpo share price dynamics February 2017

In Warsaw volatility of the largest Ukrainian companies share prices have been quite low both Astarta and Kernel declined vs. previous week close by about 1.8%, quotes of Ovostar and Industrial Milk Company remain stable.

Despite mediocre weekly performance, dynamics of Ukrainian companies quoted in Warsaw since the beginning of Y2017 is quite good. Best illustration - growth of WIG-Ukraine index (index of Ukrainian companies traded on Warsaw Stock Exchange) since the end of December by 18% (top-performer is Kernel with growth of 21.4%).

Commodities

During last week iron ore price skyrocketed again now it exceeded USD 90/t, having reached local maximum level of USD 91.7/t on Tuesday and closing the week at USD 90.4/t. Steel prices in China grew as well by 5-10%, so even if such dynamics will prove itself unsustainable, it is good for short-term prospects of Ukrainian producers (part of them for example Metinvest and ISD have a lot of problems related to escalation of the conflict in the East of Ukraine).

Following the fact that in the beginning of the week agri-commodities prices at Chicago exchange continued its growth and reached the highest levels since June, taking into account good pace of Ukrainian grains export (which especially refers to wheat), on the last week wheat and corn prices in Ukrainian ports reached their highest levels since the start of current season as well. Corn (on CPT basis) traded at almost USD 160/t level (mainly trading at close to USD 158/t), wheat USD 161-174/t (depending on port and quality). On the other side sunflower oil prices slightly declined to USD 725-730/t.

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Company Price, USD Market Cap Change,%
MHP
Kernel
Ferrexpo
Astarta
Ovostar

Type Price Weekly change,% Annual change,%
Corn CBOT
Wheat CBOT
Iron Ore
Crude Oil

Currency Rate Weekly change,% Annual change,%
USD/UAH
EUR/USD
USD/RUR