AUGA Group: You are what you eat (stays BUY)
Based on its recent operational performance, and reflecting the expected market trends, we have updated our model and reiterate our BUY rating on AUGA Group, with a new 12M price target (PT) of EUR 0.74/share (from EUR 0.64), implying 38% upside. Despite the 27% share price appreciation since our initiation in November 2020, we still believe that AUGA looks attractive in both the short and long terms. In the short term, we expect it to perform well, thanks to increasing commodity prices and the reopening of the economy. In the long term, we believe in AUGA’s vision to become a fully organic, sustainable and carbon-neutral producer, driven by agricultural technologies (agritech) in development currently. Once AUGA starts presenting the results from its R&D programme and offers its platform to other organic producers, we believe the market is likely to pay more attention to the stock, which remains undervalued, as of today, in our view. AUGA trades at our 2021-22E P/Es of 15.1-16.8x, EV/EBITDAs of 10.2-11.5x, and EV/EBITDAs of 7.5-8.6x, if adjusted for IFRS 16, all attractive multiples vs. its peers. AUGA stands out in our coverage universe, in terms of its vision, transparency and ESG profile, we believe.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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