LHV Institutional Baltic Insight, September 3rd, 2020
* AUGA Group (hereinafter referred to as the ‘Company’) published another strong quarterly result. It stated that, despite the COVID-19 pandemic, the agricultural sector has gained this season due to the better weather conditions. The Company itself has benefitted even further from improved efficiencies.* The Company’s revenues increased by 26.5% y-o-y to EUR 17.7m, which was c.a. 17.2% higher than our estimated revenues. It also showed significant improvements in the consolidated gross and operating profits, increasing 43.5% y-o-y to EUR 4.9m and 121.3% y-o-y to EUR 2.6m, respectively. An increase in financial costs from EUR 1.0m to EUR 1.5m y-o-y, mostly on account of IFRS16 related interest expenses and nearly EUR 0.4m attributable to interest relating to the bond issue.
* Nonetheless, the Company still managed to generate a net profit of EUR 1.1m, which was significantly higher than the Q2 2019 net profit of EUR 0.2m. This closely matched our EUR 1.1m net profit estimate, though the net margin was weaker at 4.7%. Overall, though, we are pleased with the outcome for the quarter. This would have been even higher if the EUR 1.5m fair value gain relating to the season had been attributed to the current financial year rather than the end of 2019. Our fair value range for the Company is EUR 0.45-0.55 (closing price as of 2nd September 2020 was EUR 0.436 per share). Please also refer to the tables in the attachment.
Auga Group AB. Auga Group AB, formerly Agrowill Group AB, is a Lithuania-based company engaged in the agriculture sector. The Company's activities are structured mainly into three divisions, namely Mushroom-growing, Plant production and Livestock production. The Company offers white, brown, portabella, eryngii, pleurotus and shiitake mushrooms. It specializes in organic wheat and other crops, including organic vegetables and organic feed for livestock in its farms. The Company supplies potatoes, beetroots, onions, carrots, marinated champignons, marinated beetroots, among others. The Company operates own trademark AUGA. In addition, the Company is involved in own farms management. The Company has numerous subsidiaries, including UAB Arginta Engineering, UAB AVG Investment and UAB Agro GIS, among others. It operates domestically on the Lithuania territory.
LHV Bank is an independent pan-Baltic bank, based on Estonian capital. The company was founded in 1999 by two founders of Hansapank (today’s Swedbank in the Baltics) and has been offering a full range of investment services for 15 years. In May 2009, LHV received a credit institution licence allowing it to provide all banking services.
The head office is situated in Tallinn, Estonia. Cross-border services are offered in Vilnius, Lithuania and in Riga, Latvia. LHV provides brokerage (institutional and retail), asset management, banking and capital markets services. Compared to other banks, we are more innovative and have more solid experience in investment and entrepreneurship.
The Bank, together with the Group asset management company employs over 320 people. LHV Group shares are listed on Nasdaq Tallinn.
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