AUGA Group: Crisis brings opportunity! (stays BUY)
We keep our BUY rating on AUGA, with a new 12M price target (PT) of EUR 0.61/share (from EUR 0.74), implying 23% upside. The decline in our PT reflects AUGA’s poor performance this year, but we still expect the company to keep posting improvements going forward. This year, AUGA was hit by the unfavourable weather in the summer and we forecast the negative impact on the crop segment to persist into 1H22E. However, improvements in its mushroom, dairy and FMCG segments are being seen already, and we model the crop segment to perform much better in 2H22E. The operating results this year are disappointing, but AUGA has pleased us with its newest R&D announcement – a functional biogas tractor. We would see stronger 2022E results as a short-term trigger, and also focus on AUGA’s long-term vision to become a fully sustainable and organic agro producer. AUGA trades at our 2022-23E P/Es of 13.1-17.5x and EV/EBITDAs of 7.0-7.9x, at attractive multiples vs. its peers. We like AUGA’s transparency and ESG profile, and we still see it as one of the most interesting names in our coverage universe; however, the investment is mainly for the long term, with our expectations of positive momentum next year.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.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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