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|loganair: Half Year Report 2012
Alpcot Agro, the Russian and Ukrainian producer of agricultural commodities, announces its results for the six months ending 30 June 2012.
Highlights - (Figures in brackets relate to the six month period ending 30 June 2011.)
Total revenue and gains for the period ended 30 June 2012 amounted to KSEK 256,764 (104,862) of which KSEK 80,377 (34,645) was a gain from changes in fair value of biological assets.
The Group reported a positive operating result before depreciation and amortization for the period of KSEK 15,333 (35,516). Net profit was KSEK 33,322 (net loss 28,704).
A negative goodwill gain of KSEK 98,109 has been recognized in relation to the Landkom acquisition to reflect that the estimated fair value of acquired net assets exceeded the consideration. (Alpcot Agro purchased Landkom for SEK 150,253 while Landkom had net assets at fair value of SEK 248,435 - as we thought the management of Landkom sold out to Alpcot for too lower price.)
Net asset value per share at 30 June 2012 was SEK 10.14 per share (SEK 12.55) and profit per share amounted to SEK 0.25 (loss SEK 0.43).
On June 30 2012, Group debt, incorporating lease financing and interest bearing bank borrowings, totaled KSEK 201,727 (174,564). Group cash at the same period was KSEK 30,472 (191,753).
Expansion of planted area by 37 per cent compared to 2011 at 133,400 hectares ("ha") including 6,000 ha of fodder crops for the Group's livestock operations.
Harvesting of winter crops materially completed, incorporating approximately 56 per cent of total expected harvest ha for the year or 74,400 ha.
The yields to date in Ukraine are comparable to 2011. Material improvements have been made on the lands which were planted by Alpcot Agro in the fall, but the average results are brought down by the fields that were planted in the fall by Landkom. The yields in Russia continue to show an upward trend.
Expected improvements over the coming year are likely to be as a result of improvements in the land bank. This is of particular significance in Ukraine, where prior to the acquisition, much of the Landkom land was planted in inefficient locations which leads to poor utilisation of machinery, increased indirect farming costs and poorer management control. This is especially evident in the results of the 2012 rapeseed harvest of which a majority was planted by Landkom. Legacy Alpcot Agro Ukraine rapeseed yields were 26 per cent higher than former Landkom land despite the land being of a similar quality and the cost structure being comparable. The Group would seek to equalise these yields in coming years improving Group profitability.
Crop sales campaign realizing near historically high prices.
Russian dairy operations continue to benefit from the Group's 2011 investment with milk production up 21.3 per cent year on year.
At the period end the Group retained a land bank of approximately 179,500 ha in Russia and 101,800 hectares in Ukraine giving total land under control of 281,300 ha.
The Group issued a total of 39.8 million new shares in January consisting of an issue in kind of 20.0 million shares as consideration for the payment of the acquisition of Landkom and a directed share issue of 19.8 million shares at a share price of 7 SEK which provided the Group with proceeds of KSEK 138,400 before issue costs.
Jens Peter Aabyen, Managing Director, commented "We have maintained our strong momentum during the first six months of the financial year, in terms of substantially diversifying our geographic risk, improving operational efficiencies as well as notably increasing the amount of land planted. We now have more land being farmed than ever before, with more efficiency and more knowledge. We look forward to cultivating the Landkom land to deliver the same strong results as Alpcot Agro land.
"Our crop yields and sales agreements to date are encouraging and current commodity prices give us confidence for the year. Selected land disposals are being made across Ukraine and Russia to deliver a resultant land bank which permits the most efficient and consolidated operating units"|
|loganair: Alpcot 2011 Ukraine Harvest Results:
Crop Harvested area ha...Harvest ton..Yield ton/ha
Corn...........3,300......30,900..........9.4 (LKI 6.3) = 49% higher
Winter Wheat...5,500......24,900..........4.5 (LKI 3.5) = 28% higher
Soya...........2,500.......4,200..........1.7 (LKI 1.2) = 41% higher
Winter Rape......900.......2,400..........2.7 (LKI 1.9) = 42% higher
As can been seen from the above Alpcot had a significantly higher yield then LKI for the same crop. LKI did not plant any Buckwheat so there is no equivalent.
If LKI had come any where near the harvest yields of Alpcot, especially for the Rape Seed then they wouldn't have run out of cash with their share price being more like in the region of 10p to 12p.
LKI forward sold 30,000 tons of Rape but only harvested 26,225 tons and therfore had to buy in a significant about of Rape to cover the forward sales agreements. With a similar yield to Alpcot, LKI would have harvested in the region of 37,300 tons.|
|loganair: Alpcot current share price 7.95SEK, up 27% since announcing take-over of LKI.
ALPA @ 7.625SEK = LKI @ 3.22p|
|bam bam rubble: The consideration under the recommended offer represents an equivalent value of 2.62p per Landkom Share based on Alpcot Agro's closing price on Dec 19th 2011
A takeover at 16% discount to the mid-price, 60% below the share price as of Jan 2011 and 95% below the IPO price, another AIM disaster|
|loganair: HT - According to my Russian broker, due to such poor harvest results Fair Value for LKI is around 6p to 7p per share at most. If 2012 LKI have a good harvest, the harvest they had predicted for this year then 10p to 12p would be Fair Value for 2012.
Where do you come up with worth 20p minimum from? If LKI had similar yields to CFGP, then their Fair Value would be around 15p per share and only with expectation with better to come in 2012 may then push the share price up to your minimum.
Next year LKI will need to increase their yields by about 50% with no more than 5% loss for this 15p Fair Valuation.|
|darcon: 1. the company needs to manage investor expectations better. Failing to release information when the company said to expect it creates further uncertainty as to why the delays have occurred.
Is the delay purely for commercial reasons or is the company delaying because the western and central harvests are below expectations. I hope we don't see a 4pm RNS with a lot of bad news thrown in
2. by delaying the release of info LKI gives insiders and some in Ukraine a trading advantage versus rest of us. Again, I hope the recent fall in share price is only a reflection of wider market uncertainty and perhaps some fund exiting Ukraine and not about some insider selling because he knows more than we do|
|hightech: Hi Giant,
If the same applies to LKI in terms of harvest rate etc, what would be the likely profit and share price?
Was the harvest by LandKom similar to Alpcot Agro last year?|
|loganair: I don't understand chartists in many stocks?
A good harvest for Landkom share price 10p, a poor harvest share price falls back to 4p as simple as that.
2012, a good harvest for Landkom share price 12p to 15p, a poor harvest share price falls back to sub 6p.|
Had closer look at the research reports and assumptions from Liberum Capital and Edison.
Run some broad brush assumptions and taken them through the P&L to try to guess at what EPS outcome for 2011 could be. Most analysts expect reversion in crop prices for 2012 so I reckon given the difficulty of forecasting commodity pricing/harvest etc it won't get a high PER so mid single digits would be maximum one would expect. (6-7x PE would suggest share price potentially of 13-15p based on my guesstimations).
Liberum note :-
Edison note :-
Key assumptions :-
Liberum : planted 46.8k
Edison : planted 48k
Actual : planted 52k
Liberum : $530/MT (compared with spot of $640/MT)
Edison : $500/MT
Actual : some sales at $600/MT
Liberum : $50m
Edison : $46.1m
Possible : (10% upside from Land planted 10% upside from prices = $48m x 1.1 x 1.1 = $58m)
Liberum : $17m
Edison : $15m
Possible : Assuming $32m of costs = $26m
Liberum : $9.3m
Edison : $7.5m
Possible : Assuming $8m of D&A = $18m
Liberum : $7.7m
Edison : $6.8m
Possible : Assuming $1m of I = $17m
Liberum : 1.8p
Edison : 1.0p
Possible : EPS potential of 2.3p (using 435m shares in issue)|
|loganair: hosede - example - Rank share price fell in 18 months from £3.20 to £1. In the next 6 months it kept falling until it reached 50p, during this six months Guoco purchased just over 29% of Rank and its share price kept falling.
After Guoco purchased their 29%, in only around six months the share price rose to around £1.30.
IMO - In these cases the mm's kept the share price falling so the stupid frighten private investor sells out, allowing the big institutional investor to buy in at an ever decreasing share price. Then the share price rebounds to its true value.|
Landkom share price data is direct from the London Stock Exchange