Ksg Agro in six charts

Landbank dynamics, ths ha		Crop structure, by ha
Source: Company data, Concorde Capital		Source: Company data, Concorde Capital

Crop yields, 2010		Crop yields, 2011
Source: Company data, State Statistics Committee of Ukraine		Source: Company data, State Statistics Committee of Ukraine

Production costs, USD/ha, 2010 Sunflower		Wheat		Barley
Source: Company data, State Statistics Committee of Ukraine		Source: Company data, State Statistics Committee of Ukraine		Source: Company data

Mcb Agricole Acquisition target with lack of positives for minorities

• With 90 ths ha spread across 13 regions of Ukraine, MCB Agricole is a close approximate to the average Ukrainian agricultural company in terms of operating efficiency

• While posting a 9% average yield premium to the average in comparable regions at a slightly higher costs, the company`s gross profit is harmed by one of the lowest realized crop selling prices

• High SG&A costs, at 18-20% of sales erase gross profit further, resulting in a 9% EBITDA margin in 2008, -6% in 2009 and 16% in 2010 – one of the lowest figures among listed agricultural companies

• Low profitability, failure to list on WSE last year and low majority shareholder commitment to the business makes MCB Agricole a clear acquisition target, in our view. With one of the least inspiring acquisition track records among Ukrainian listed agricultural companies, we see a possible unfair treatment of minority shareholders as a major risk

• We rate the stock HOLD due to high risks, even though it is trading at the lowest EV/ha multiple in the sector and our asset-based valuation points to a significant upside

Watch:

• Management decision on whether to delist from the Frankfurt Stock Exchange or to move to another listing level: May-June 2012

• Spring sowing campaign results: May 2012

• 2012 harvest results: June-November 2012

• 2011 annual financials: December 2012

Company description:

Operates 90 ths ha dispersed in 13 regions across Ukraine. Does not own storage assets. Unsuccessfully attempted to place 25% stake at IPO in December 2011 to finance construction of rapeseed processing plant. DRs listed in Frankfurt.

Selected financials, USD mln and ratios
	2010	2011E	yoy	2012E	yoy
Net revenue	34.4	50.8	48%	52.4	3%
Gross margin, %	34%	21%	-12pp	19%	-2pp
EBITDA	5.3	5.8	9%	4.7	-19%
EBITDA margin, %	15%	11%	-4pp	9%	-2pp
Net income	3.8	2.7	-30%	0.9	-65%
Net margin, %	11%	5%	-6pp	2%	-3pp
PP&E, net	10.6	11.7	10%	12.7	8%
Shareholder equity	50.0	52.6	5%	53.5	2%
LT debt	0.1	0.0	-100%	0.0	n/m
ST debt	5.8	11.6	99%	12.6	8%
Total liabilities & equity	9.7	17.8	84%	19.0	7%
Operating Cash Flow	-4.5	-0.6	n/m	1.9	-423%
CapEx	0.2	2.8	14x	2.8	2%
Working Capital	41.4	44.6	8%	45.3	1%
Harvest value, USD/ha	510	606	19%	634	5%
Gross profit, USD/ha	165	103	-37%	98	-5%
ROA	6%	4%	-2pp	1%	-3pp
ROE	8%	5%	-3pp	2%	-3pp
ROIC	8%	5%	-3pp	3%	-2pp
Source: Company data, Concorde Capital estimates

4GW1 GR	Current:	USD 5.0	HOLD
	Target:	USD 4.0

Market data

Bloomberg

Reuters

Recommendation

Price, USD

12M target, USD

Upside

No of shares, mln

Market Cap, USD mln

52-week performance

52-week range, USD

ADT, 12M, USD mln

Free float, %

Free float, USD mln

Source: Bloomberg

Ownership structure
Xxxxxxxxxxxxxxxx	xx.x%
Xxxxxxxxxxxx	xx.x%
Xxxxxxxxxxxxx	xx.x%
Source: Company data, Concorde Capital estimates

Share price performance ⁽¹⁾

(1) Hereafter, share prices as of XXX XX, XXXX

Source: Bloomberg

Multiples and per-share data
	2008	2009E	2010E
EV/Capacity	xx	xx	xx
EV/Output	xx	xx	xx
EV/Sales	xx	xx	xx
EV/EBITDA	xx	xx	xx
P/E	xx	xx	xx
P/B	xx	xx	xx
Source: Bloomberg, Company data, Concorde Capital Company`s landbank, ths ha Source: Company data