AUGA Group: favourable macro, green triggers imminent (stays BUY)
We keep our BUY rating on AUGA, with a new 12M price target (PT) of EUR 0.70/share (from EUR 0.66), implying 70% upside. AUGA’s mushroom business is now fighting high energy costs, and the growth potential of its FMCG segment is being slowed by the difficult global situation. However, with notable improvements in its dairy segment and a stronger yoy crops result, we see a very good year ahead for the company overall. Moreover, in 4Q22E, the company plans to launch its first biomethane unit that will start charging its first batch of electric tractors, while selling extra power to the grid. Based on the current outlook, AUGA should benefit from the favourable pricing dynamics in dairy and crops, while facing no cost pressure on fertilisers. Lastly, we believe that the latest share price drop was driven by employees selling shares, after the distribution of c.1% of the total shares through the employee stock option programme. AUGA is trading currently at our 2022-24E EV/EBITDAs of 5.4-11.3x, well below its historical averages.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.
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