Capitalization of Ukrainian agro-holdings in H1 2018

20.08.2018

In the first half of 2018, the capitalization of Ukrainian agro-holdings listed on foreign exchanges generally showed two peaks (EUR 2.93-3.0 Bl on January 24-30 and EUR 2.82-2.86 Bl on May 16-22) followed by a decline in the latter half of June, UkrAgroConsult analysts report.

Remarkably, the amount of capitalization at the start and the end of this period was actually the same: EUR 2.57 Bl as of January 2 and EUR 2.56 Bl as of June 29, 2018.

At the same time, the capitalization of Ukrainian agro-holdings in January-June 2018 was lower than in 2017. Its gap between 2017 and 2018 equaled EUR 300-400 Ml.

This stems mostly from two groups of reasons: firstly, a rise in business risks, including this season’s climatic risks; secondly, currency exchange trends. 

The capitalization level is determined by the market value of major agro-holdings, including MHP, Kernel, Astarta, Ovostar, MMK, whose shares are listed on the Warsaw and London Stock Exchanges.

In this connection, last year’s strengthening of the zloty against the euro pushed up their euro-denominated capitalization, which was then brought down by a weakening Polish currency in H1 2018. In 2017 and 2018, the pound to euro exchange rate followed counter-trends compared to the zloty, but they were less pronounced (see diagrams below). 

The UAIndex of the agro-holdings fluctuated within 4.5-5.0 points in the first half of 2018. The year opened at 4.56 points, peaked at 5.06 (May 17) and bottomed at 4.51 (June 27).

The capitalization of public agro-holdings and its volatility generally reflect the overall financial attractiveness of Ukrainian agribusiness for portfolio investors. Unfortunately, the first half of this year did not improve it compared to last year. Hopefully, the latter half will be more successful in this respect.

Detailed information on the latest trends in grain exports, supply and demand balances with breakdown by crop, price behavior as well as on crop conditions and progress in harvesting in the countries of Black Sea Region is available to subscribers for weekly market report "Black Sea Grain" by UkrAgroConsult.

 

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