Kernel - Tight Sun-Oil Supply Spells Fat Profits
Prices of sunflower oil have been trending sharply higher since global inventories started to decline in May, driving up the profits of seed crushers like Kernel. According to the US Department of Agriculture, by the end of the 2020/21 season, the worldwide reserves of vegetable oils may be reduced to a level not seen since 2010/11, and relative to demand they might reach the lowest figure on record, in a continuation of the trends observed in previous years. When it comes to sunflower oil, its supply is expected to be among the lowest in a decade. Against this backdrop, we currently expect the FY2020/21 EBITDA of Kernel's Oilseed Processing segment to register a 50% rebound from the year-ago figure at $190m, including a $15m boost from new captive biofuel facilities. As a result, we are anticipating free cash flow for the year of $77m, and we are predicting a decrease in the net debt/EBITDA ratio to 3.1x (a revision of our original estimate of 3.6x). Together with improved results in the Farming segment, the total FY2020/21 EBITDA in our view might increase to $445m, implying a need for an upward revision to the current consensus forecast of $403m. On the updated outlook, we upgrade KER two notches to buy, and we raise our target price from PLN 44.58 to PLN 56.35 per share.
Kernel Holding is a holding company. Co.'s is a diversified agribusiness engaged in the production and sale of bottled sunflower oil (sold under brand names Schedry Dar, Stozhar and Chumak Zolota), the production and subsequent export of bulk sunflower oil and meal, the wholesale trade of grain (mainly wheat, barley and corn), farming, and the provision of logistics and transshipment services n the ports of Ilyichevsk, Taman and Mykolaiv. The majority of Co.'s manufacturing facilities are primarily based in Ukraine and Russia. In addition, Co. is a private provider of inland silo services in Ukraine.
Set up in 1986, mBank (originally BRE – Export Development Bank) is Poland’s 4th largest universal banking group in terms of total assets and 5th by net loans and deposits at the end of June 2019. mBank has one of the oldest brokerages in Poland – we have been providing brokerage services since 1991 - and the biggest, serving about 300 ths clients.
We provide all brokerage services available in the Polish capital market (i.e. Warsaw Stock Exchange, non-public markets and forex) in a way that meets the expectations of all groups of investors, both individual and institutional. Participating in the dynamic growth of the Polish capital market since its inception, we have acquired competences and experience needed to provide the highest quality of service and we have won the trust and satisfaction of our Clients.
Over the past decade, mBank's Equity Research Team has been consistently ranked among the top research teams in Parkiet's annual institutional investor surveys (Parkiet is Poland's leading daily business newspaper). mBank analysts provide coverage on an extensive list of companies, mainly in Poland but also elsewhere in the CEE region: Austria, Czechia, Portugal, Ukraine and Hungary.
Clients get access to a comprehensive selection of research products including daily market insights, monthly roundups, macroeconomic views, industry- and company- specific analyses, investing strategies, earnings comments, etc.
We give our institutional clients numerous opportunities to connect with industry professionals, top executives, and leading analysts:
- Get direct access to senior management teams at listed companies (over 30 meetings in 2018),
- Engage in our many industry events, featuring listed Polish and global firms (in 2018, we hosted sector-themed conferences around industrials, chemical companies, telecoms, retail, and financials, and co-hosted a Best of Poland investors' with Commerzbank and the Warsaw Stock Exchange),
- Stay informed through an array of enlightening discussion panels, workshops, and briefing sessions with regulatory officials.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.