Kernel: Land reform risk easing, profits to grow (BUY - transfer of coverage)
Due to a change in analysts’ responsibilities, we transfer coverage of Kernel, setting our 12M price target (PT) at PLN 60.0/share (43% upside), with a BUY rating. We see the land reform act, passed in early-April, as highly favourable for Kernel, as it opens up the land market for corporations from mid-2024E. This implies that the company should have enough time to complete its capex programme and deleverage, and also creates space for paying out a higher dividend. Moreover, we like Kernel for its: i) profit growth profile (a FY19-22E EBITDA CAGR of 10%, excluding the IFRS 16 impact, on our numbers); ii) new investments (railcars fleet, green energy facilities, crusher and export terminal), which should improve the resilience of its profits to commodities prices, in our view; and iii) solid FCF generation capacity (c.20-35% 2021-22E FCF yields, on our estimates).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.
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.
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.