Capitalization of Ukrainian agri holdings in the first half of 2017

12.07.2017

In the first half of 2017, capitalization of Ukrainian agri holdings, which shares are listed at foreign exchanges, increased from EUR 2.64 billion as of January 02, 2017 to EUR 2.98 billion as of June 30, 2017 reaching the high of EUR 3.16 billion on March 02.

capitalizationDespite the fact that the market value of agricultural holdings in the mentioned period increased 16.4%, its growth was unstable.

The bullish trend of capitalization was observed since January to May.

UkrAgroConsult believes that this was conditioned primarily by:

  • stable shipments and deliveries of goods in the first months of this year;
  • quite successful arrangements for the sowing season and adaptation to the current macroeconomic situation in the country;
  • transfer of the land market opening issue to a practical level.

Since May, the trend turned downward. A relative decrease in the capitalization of agricultural holdings in May-June is explained by the combination of factors, including the following:

  • by this time, the prospect of a rich harvest, both in Ukraine and other producing countries began to appear more clearly;
  • in anticipation of high world supply, the forecasts of moderate selling prices pressured the return rate of agri holdings.

It is also necessary to make adjustments to the traditionally speculative factor. After a period of growth, in June, the aggregate share price of agricultural holdings (UAIndex) decreased from EUR 5.37 to EUR 5.11 (-4.8%).

uaindexAt the same time, in January-June 2017, the capitalization of Ukrainian agri holdings was much higher than in 2016. The gap in its amount between 2016 and 2017 reached EUR 321 million at the beginning of January and had increased to EUR 490 million by June 30 of the corresponding years.

Capitalization growth over the first half of 2017 totaled EUR 246 million, compared to EUR 77 million in the same period of 2016.

The overall financial attractiveness of Ukrainian agribusiness is reflected in the capitalization of public agri holdings and the dynamics of its changes. In 2016/17, its growth testifies to effectiveness of the agricultural sector for investors. In this regard, it will be interesting to follow the dynamics of capitalization in the light of practical opening of the land market, the issue of which is postponed for at least six months.

As a reminder, earlier UkrAgroConsult noted in its study “2017-2022: Development of Ukraine’s agribusiness strategies. Investment climate. Factorial analysis” that the moratorium on agricultural land is likely to be extended for another 3-5 years.

 

UkrAgroConsult

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