Review of "Abrau-Durso": stock growth driven by news amid moderate monetary characteristics

General feature of the company

PJSC "Abrau-Durso" is the management company of the group of companies of the same name, the main one is CJSC "Abrau-Dyurso".

Other companies can qualify as subsidiary: these are viticulture and wine companies, acquired by a group of companies, trade companies, construction or transportation, necessary for the main sphere of PJSC - winemaking.

PJSC "Abrau-Durso", actually, the only wine company, which has a listing on the Moscow Exchange.

The main products of the group of companies are sparkling wines, Still wines and soft drinks are produced as additional products. Over the recent period, the group of companies has been practicing wine tourism and positioning itself as the most visited winery in Europe by travelers.. One of the specializations of the group of companies is education in the field of winemaking, direct rivals do not have this service.

The export geography of the group of companies includes 24 states of the world, largest users: Germany, England, Czech Republic, Hungary, Greece, Finland, India, Japan, also the Baltic states and the CIS. This year, deliveries to the United States have been resumed again., where the group of companies is the only supplier of Russian wines.

Structure of PJSC "Abrau-Durso"

Company Functions
PJSC "Abrau-Durso" Head company, is engaged in consulting and company management, which are part of the group
CJSC "Abrau-Dyurso" Winemaking
LLC "Atelier of wine Abrau-Durso" Retail trade in beverages
Foundation for the revival of winemaking traditions "Heritage of Abrau-Durso" Financial intermediation
LLC "Center of Wine Tourism" Abrau-Dyurso " Beverage trade, tobacco products and products
LLC "Territory Abrau-Dyurso" Development and sale of commercial real estate
LLC "East Wind" Retail trade in beverages
LLC "International School of Winemaking Abrau-Durso" Educational activities
LLC "Kuban wine-making artel" Wholesale of beverages
LLC "TD Abrau" Wholesale of beverages
CHOU "ODPO" School of Gastronomy Abrau-Durso "" Additional professional education
LLC "Abrau-Stroy" Construction site
LLC "Project Company" Development and sale of real estate
NP "Air Transport Abrau" Irregular air transportation
LLC TD Abrau Yug Wholesale of beverages
LLC "Abrau-Durso" Viticulture
LLC "UK" Donvinprom "» Company management
LLC "Winery" Vedernikov " Viticulture
JSC "Millerovsky Winery" Winemaking
LLC "Vine" Winemaking
LLC "Agrofirma" Akhtanizovskaya "", acquired in 2020 Viticulture
LLC "Agrofirma" Jubilee "", acquired in 2020 Viticulture
LLC "Winery" Jubilee ", acquired in 2020 Winemaking
LLC "Russian vinoteka" Retail trade of products
LLC Agrofirma Starotitarovskaya, acquired in 2020 Viticulture
LLC "Abrau-Service" Comprehensive service

Company
Functions

PJSC "Abrau-Durso"
Head company, is engaged in consulting and company management, which are part of the group

CJSC "Abrau-Dyurso"
Winemaking

LLC "Atelier of wine Abrau-Durso"
Retail trade in beverages

Foundation for the revival of winemaking traditions "Heritage of Abrau-Durso"
Financial intermediation

LLC "Center of Wine Tourism" Abrau-Dyurso "
Beverage trade, tobacco products and products

LLC "Territory Abrau-Dyurso"
Development and sale of commercial real estate

LLC "East Wind"
Retail trade in beverages

LLC "International School of Winemaking Abrau-Durso"
Educational activities

LLC "Kuban wine-making artel"
Wholesale of beverages

LLC "TD Abrau"
Wholesale of beverages

CHOU "ODPO" School of Gastronomy Abrau-Durso ""
Additional professional education

LLC "Abrau-Stroy"
Construction site

LLC "Project Company"
Development and sale of real estate

NP "Air Transport Abrau"
Irregular air transportation

LLC TD Abrau Yug
Wholesale of beverages

LLC "Abrau-Durso"
Viticulture

LLC "UK" Donvinprom "»
Company management

LLC "Winery" Vedernikov "
Viticulture

JSC "Millerovsky Winery"
Winemaking

LLC "Vine"
Winemaking

LLC "Agrofirma" Akhtanizovskaya "", acquired in 2020
Viticulture

LLC "Agrofirma" Jubilee "", acquired in 2020
Viticulture

LLC "Winery" Jubilee ", acquired in 2020
Winemaking

LLC "Russian vinoteka"
Retail trade of products

LLC Agrofirma Starotitarovskaya, acquired in 2020
Viticulture

LLC "Abrau-Service"
Comprehensive service

Financial performance

With a rich "work biography", the indicators of the group of companies for 2020 and 1 quarter of 2021 turned out to be rather modest.

For 2020 CJSC "Abrau-Dyurso", as the parent company of a group of companies, ranks only seventh among the top ten wineries in the Krasnodar Territory in terms of revenue growth, and in terms of revenue - the third place. LLC "Vine", which is one of the top ten Kuban wineries, generally reduced revenue for 2020.

The company's revenue by segment

Source of income Revenue in 2019, thousand rubles Revenue in 2020, thousand rubles Share in revenue in 2019 Share in revenue in 2020
Sale of sparkling wine 8 546 875 8 620 877 93,01% 85,752%
Dining room services, hotels, organization of wine tourism, etc.. 529 161 680 868 5,76% 6,773%
Sale of wine material 0 211 443 0,00% 2,103%
Sale of other goods: quiet wines, soft drinks 113 307 539 855 1,23% 5,370%
Royalty for "Atelier of Wine" and gastro bars 0 227 0,00% 0,002%
Total 9 189 343 10 053 270 100% 100%

Sale of sparkling wine

Revenue in 2019, thousand rubles
8 546 875

Revenue in 2020, thousand rubles
8 620 877

Share in revenue in 2019
93,01%

Share in revenue in 2020
85,752%

Dining room services, hotels, organization of wine tourism, etc..

Revenue in 2019, thousand rubles
529 161

Revenue in 2020, thousand rubles
680 868

Share in revenue in 2019
5,76%

Share in revenue in 2020
6,773%

Sale of wine material

Revenue in 2019, thousand rubles
0

Revenue in 2020, thousand rubles
211 443

Share in revenue in 2019
0,00%

Share in revenue in 2020
2,103%

Sale of other goods: quiet wines, soft drinks

Revenue in 2019, thousand rubles
113 307

Revenue in 2020, thousand rubles
539 855

Share in revenue in 2019
1,23%

Share in revenue in 2020
5,370%

Royalty for "Atelier of Wine" and gastro bars

Revenue in 2019, thousand rubles
0

Revenue in 2020, thousand rubles
227

Share in revenue in 2019
0,00%

Share in revenue in 2020
0,002%

Total

Revenue in 2019, thousand rubles
9 189 343

Revenue in 2020, thousand rubles
10 053 270

Share in revenue in 2019
100%

Share in revenue in 2020
100%

Annual financial performance of the company

2019 2020
Net profit margin 313,60% 140,60%
Asset turnover ratio 0,07 time 0,05 time
Return on assets 23,28% 6,80%
Return on equity 27,60% 9,57%

Net profit margin

2019
313,60%

2020
140,60%

Asset turnover ratio

2019
0,07 time

2020
0,05 time

Return on assets

2019
23,28%

2020
6,80%

Return on equity

2019
27,60%

2020
9,57%

Quarterly financial performance of the company

1 neighborhood 2020 1 neighborhood 2021
Net profit margin 750,7% −166,3%
Asset turnover ratio 0,01 time 0,01 time
Return on assets 9,11% −1,12%
Return on equity 10,58% −1,60%

Net profit margin

1 sq. 2020
750,7%

1 sq. 2021
−166,3%

Asset turnover ratio

1 sq. 2020
0,01 time

1 sq. 2021
0,01 time

Return on assets

1 sq. 2020
9,11%

1 sq. 2021
−1,12%

Return on equity

1 sq. 2020
10,58%

1 sq. 2021
−1,60%

Indicators of the company's revenue

Company Revenue, billion rubles Revenue growth for 2020 year
LLC "Anapskie wines" 0,69 451,59%
JSC "Agrofirma" Yuzhnaya "" 2,90 39,42%
OJSC "Agroindustrial firm" Fanagoria " 4,90 22,50%
LLC "TVK-Kuban" 1,50 21,13%
LLC "Valley" 0,98 15,00%
LLC "Kuban-wine" 7,07 14,00%
CJSC "Abrau-Dyurso" 8,72 6,00%
LLC "Kuban Wine Company" 0,78 2,19%
LLC "Vine" 0,78 −17,00%
LLC "Soyuz-wine" 3,05 −28,00%

LLC "Anapskie wines"

Revenue, billion rubles
0,69

Revenue growth for 2020 year
451,59%

JSC "Agrofirma" Yuzhnaya ""

Revenue, billion rubles
2,90

Revenue growth for 2020 year
39,42%

OJSC "Agroindustrial firm" Fanagoria "

Revenue, billion rubles
4,90

Revenue growth for 2020 year
22,50%

LLC "TVK-Kuban"

Revenue, billion rubles
1,50

Revenue growth for 2020 year
21,13%

LLC "Valley"

Revenue, billion rubles
0,98

Revenue growth for 2020 year
15,00%

LLC "Kuban-wine"

Revenue, billion rubles
7,07

Revenue growth for 2020 year
14,00%

CJSC "Abrau-Dyurso"

Revenue, billion rubles
8,72

Revenue growth for 2020 year
6,00%

LLC "Kuban Wine Company"

Revenue, billion rubles
0,78

Revenue growth for 2020 year
2,19%

LLC "Vine"

Revenue, billion rubles
0,78

Revenue growth for 2020 year
−17,00%

LLC "Soyuz-wine"

Revenue, billion rubles
3,05

Revenue growth for 2020 year
−28,00%

Reasons for poor performance

Decline in the purchasing power of the population. In Russia, and in a number of other countries, where the products of "Abrau-Dyurso" are exported, purchasing power has fallen due to the crisis. Abrau-Durso's products are quite expensive compared to other Kuban competitors of the company, which produce cheaper wines in tetrapacks. This affected sales, which has continued to fall since 2020.

Increased transportation costs. The second negative moment for the group of companies is also associated with the coronavirus: prior to the entry into force of the law on the status of Russian wine and wine drinks, Abrau-Dyurso CJSC purchased a significant part of the wine material abroad. Due to coronavirus restrictions, transportation costs for the group in 2020 increased by 7 times compared to 2019.

New federal law. Entry into force of the law "On viticulture and winemaking in the Russian Federation", according to which only a product can be considered a Russian wine, made from Russian wine material, as well as tightening control over the use of wine material of unknown origin affected the company's reporting.

Prior to the entry into force of this law in the summer of 2020, Abrau-Dyurso CJSC has about 15% used in the production of wine material was supplied from abroad, still about 40% the wine material was of unknown origin, the rest of the raw materials the company took from its own vineyards.

After the adoption of the law, the company stopped using imported wine material and reduced the use of wine material of unknown origin.. Because of this, wine made by "Abrau-Durso" has risen in price, increased their cost, and the demand for them decreased due to the economic crisis. The company also had to spend money on the purchase of additional vineyard areas., to compensate for the lack of foreign wine material.

Market conditions: why the company's shares can go up

Takeoff due to the president's statement. The dynamics of prices for shares of PJSC "Abrau-Dyurso" on the Moscow Exchange is influenced not so much by its financial results, how much news. This trend is typical for other low-liquid stocks.. 25 January of this year, shares soared in one trading session by 11% after a comic statement at an online meeting with students of Russian President Vladimir Putin about, that after leaving his post he will go to PJSC "Abrau-Dyurso" to work as an adviser to Pavel Titov in the field of jurisprudence. After the application, the volume of transactions in PJSC shares 25 January amounted to 19.2 million rubles, while from the beginning of 2021 this figure did not exceed 3 million rubles.

Expansion of production capacity. After the release of the new law, PJSC acquired four enterprises: LLC "Agroferma" Akhtanizovskaya "", LLC "Agrofarm" Jubilee "", LLC Winery Yubileynaya and LLC Agroferma Starotitarovskaya. All of them are located in the Krasnodar Territory.

On the day of the purchase, PJSC shares soared by 40%. The rest of the expansion of production capacity did not cause such a resonance., but there is reason to believe, what, when the purchased vineyards will start to be used, shares will get additional upside potential.

Expansion of export. In 2020, despite the pandemic, the company has invested in the creation of new wine brands at one of the Australian wineries - the Cape brand - and at the Chilean winery - the Ten Ten and El Caleuche brands. The company also invested in the creation of its own trading house in Chinese Shanghai for the wholesale of its products.. About that, how much stock can rise, can be judged by the fact, what impact did it have on the market 17 June this year, the news about the resumption of exports of "Abrau-Durso" products to the USA. On that day, already at the beginning of the trading session, the share price soared by more than 7%.

It can be assumed, that the launch of such projects in Australia, Chile and China will positively affect the value of the company's shares. The increase in exports to the United States will also affect the price.

Risks

Protected Geographic Territory Kuban is registered and recognized by the United States, but it houses not only the Abrau-Durso enterprise. Most of the competitors from the top ten Kuban wineries have already received a license to register in this territory with the same status.. In practice, so far none of them even tried to enter the American market., but theoretically everything is possible.

Before the export ban, which happened 5 years ago, delivered there 10% company products, and in accordance with the concluded agreement, one should expect, that in the near future the share will be the same, if not higher.

Change of landmarks. Many industry analysts believe, that Russia is turning into a wine country. But the point is, that against the background of a decrease in household incomes, the main demand was formed for relatively cheap brands of wine, and above all for still wines, not sparkling. The products of "Abrau-Dyurso" do not belong to cheap ones and due to recent events they have risen in price even more. Given the continuing decline in household income due to the third wave of coronavirus, can be predicted, that the consumption of expensive wines will decrease.

Eventually

Given the tendency of shares of "Abrau-Durso" to grow on the news, can be expected, that the shares of this group of companies will grow. And this is even despite the risks and the decline in the company's financial performance during the coronavirus compared to competitors.. The growth of these shares on the news is great even against the background of other low-liquid shares, who also have this tendency. Expansion of production capacity and geography of exports will also contribute to the growth of these shares.

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