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Ukraine Exported 10 mln Metric Tons of Grain: POSITIVE
Ukraine has exported about 10 mln mt of grain since July 2008. Moreover, Ukraine exported 2 mln mt of rapeseed over the same period. This data was released by Ukrainian News.
The Ministry of Agriculture forecast that exports of grain will total 22 mln metric tons in the 2008/2009 marketing year.
According to the State Statistics Committee, grain exports from the country amounted to USD 2.6 bln in real terms in 9M08 (+242% YoY).
Our view:
The grain crops harvested in 2008 will be around 51-52 mln mt. Ukraine consumes a total of 26.4 mln mt of grain, including the industrial consumption of 6.6 mln mt (of which 5.3 mln mt is wheat). That leaves 24.6 - 25.6 mln mt of grain, including 2.15 mln mt as reserves and at least 22 mln mt for export.
A significant rise in export levels in real term can be explained in that grain export quotas were in effect for the 2007/08 marketing year and that in May 2008, due to Ukraine’s WTO accession. those quotas were lifted. Moreover, Ukraine is currently harvesting the biggest harvest it has experienced since 1991.
Kernel Did Not Pay Dividends: NEUTRAL
The shareholders of the Kernel Group [KER PW, N/R] decided to not to pay out dividends for the 2007/08 financial year. This decision was taken at their AGM, which was held on November 17, 2008. The company’s losses for the last periods in amount of USD 5.1 mln, will be transferred to the forthcoming year.
Our view:
The company is trying to accumulate cash in its accounts due to the global credit crunch and problems of attracting additional funds to run operational activities uninterrupted. Kernel’s cash increased 2.6 times QoQ and 16.7 times YoY. Kernel has decreased its debts by 25% QoQ to USD 190 mln. Moreover, as Kernel’s management stated, the company has sufficient funds to run its operational processes in 2009 without any problems.
FDI in Ukrainian Agriculture Rose 60.95% YTD: POSITIVE
According to the State Statistics Committee of Ukraine, foreign direct investments into the country’s agriculture, hunting and forestry expanded by 60.95% YTD to USD 897 mln in 10M08.
Our view:
According to estimates by various specialists, the Ukrainian agro-industrial complex requires a total of USD 25 bln. Growing investments in agriculture are adding value to the stocks of agricultural companies. A profound impact of the global crisis did not omit the agricultural stock, resulting in the downgrading of soft commodities prices and floundering liquidity. While the impressive 1H2008 financial results were supported by robust margins, the prices of Ukrainian agricultural stock has been considerably downgraded.
Nevertheless, we believe that falling prices are a perfect momentum for investors, as Ukrainian stock is currently substantially undervalued.
Group DF Officially Nadra Bank’s Major Investor: POSITIVE
According to Nadra Bank’s press service, Group DF became the major investor in Nadra Bank on November 19, 2008. "Nadra Bank has attracted a large investor, Group DF, a private international group of companies. Today, the bank possesses a stronger position than earlier, due to the synergy of a successful banking brand and a strong industrial group," states the press release.
"A new, and most importantly, Ukrainian investor, ‘Group DF’, has entered the bank. It will give a new impetus to strengthen the bank`s stability, its further economic development, and will help to retain a leading position on the market," reads the press release, quoting Nadra Bank President Ihor Hylenko.
Nevertheless, no circumstances of the deal have yet been disclosed.
Our view:
As stated in an earlier Sokrat news pieces, we believe that the DF Group’s acquisition of Nadra Bank will have a POSITIVE impact on the issues the bank faces, due to the stated intention of the new investor to provide additional resources for the bank, in addition to the DF Group becoming a corporate client of the bank to service its cash flows for all of its accounts.
We anticipate that Nadra Bank’s prospects depend on the amount of resources that will be provided by DF Group and its ability to restore the population’s confidence, which is extremely low today.
Gov takes back shares of 4 GenCos and 6 DisCos from SPF
The Cabinet of Ministers of Ukraine overturned the ruling, according to which the stakes in four thermal power generating companies (GenCos) and stakes in six distribution companies (DisCos) were to be withdrawn from the control of the National Energy Company of Ukraine (NECU) and handed over to the State Property Fund (SPF).
The list of assets that will be withdrawn from further privatization include 60%+1 share stakes in Dniproenergo [DNEN UZ, BUY], Centrenergo [CEEN UZ, BUY], Donbasenergo [DOEN UZ, BUY] and Zakhidenergo [ZAEN UZ, BUY], in addition to a 27% stake in Lvivoblenergo [LVON UZ, U/R], a 25% stake in both Prikarpatoblenergo [PREN UZ, U/R] and Odessaoblenergo [ODEN UZ, U/R], as well as a 25%+1 stake in each of the following companies: Poltavaoblenergo [POON UZ, U/R], Sumyoblenergo [SOEN UZ, U/R] and Chernigovoblenergo [CHEON UZ, U/R].
The Ukrainian Government also amended addendums to the decree dated June 22, 2004 on the establishment of the National Energy Company of Ukraine. According to such amendments,, the package of shares allocated to the control of the NECU is calculated as a percentage of shares rather than according to the number of shares.
Our view:
The government’s recent decision is a step backwards in the shady privatization process of Ukrainian electricity companies. Under the new rules, the State Property Committee will not be able to initiate privatization of the above-mentioned electricity companies, whereas the government has taken full control of the situation.
Also, the amendments made to the statute of the NECU would minimize the risk of a non-transparent privatization though additional share issues, as occurred with DNEN in 2007, and the new rules will oblige the state to keep a specific share in the company’s capital, not a specific number of company shares.
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