Agriculture
Astarta’s 9M11 results are the latest indication of how oversold the market has become in many top-tier Ukrainian names. The company recorded an outstanding harvest in 2011, with its crop tonnage nearly doubling compared to 2010. Its FY11 sugar output is expected at 350,000 tonnes, which would represent 75% YoY growth. Defying concerns about the impact of the decline seen recently in Ukrainian agricultural commodity prices, Astarta looks set to deliver UAH 1.1bn in net profit for FY11, up by 31% YoY, and also 30% higher than our forecast of UAH 840mn. Although we lower our target price for the AST stock to USD 30 due to a deterioration in the macroeconomic risk environment, we confirm our BUY recommendation for the company, noting that it trades at 2012E P/E of 3.6x.
