Rusgrain Holding Review: agro-industrial company shows results

TutorialComparator

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Community

TutorialComparator

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Community

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Investments

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Business

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Analysis of laws

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Spending diaries

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Calculators

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Travels

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Medicine and health

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Tests

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

PropertySee all

Investment fees21.12240

Rusgrain Holding Review: agro-industrial company shows results

Обзор «Русгрэйн Холдинга»: агропромышленная компания показывает результаты

Rusgrain Holding (MCX: RUGR) - one of the largest agro-industrial holdings in Russia. Located in Bashkortostan, leader in the poultry meat market in the republic, owner of the largest meat processing plant in the republic.

About company

Shares of the group of companies began trading on the RTS 22 April 2008 under the ticker RUGR, under which they are now traded on the Moscow Exchange. Later, three more additional issues were carried out.. Low liquid shares, belong to the third level of listing.

As for other low-liquid stocks, they are characterized by high volatility, while, that until some improvement in the financial performance of the group, they were in a constant bearish trend. Let's try to figure it out, how can the place of Rusgrain Holding in the Russian and Bashkir agroindustry be combined with similar results as in the reporting, and on the stock exchange and will there be a light at the end of the tunnel.

History. The group of companies itself is not very fond of spreading about its history.. It is known, that the holding was formed in 2004 on the basis of the Bashkir LLC "Russian grain", which, in turn, was established in 2002. As a result of the creation of the holding, the business of "Russian Grain" was significantly diversified: company, which is now the managing company of the holding, moved from grain trading to grain processing, poultry and compound feed production.

In the 2000s, the company actively expanded the means of production outside its native Bashkortostan., acquiring agro-industrial enterprises in Saratov, Voronezh, Volgograd and even far from the homeland of the Rostov holding, Omsk regions and Krasnodar Territory. Diversification led to results, primarily, in the poultry industry: by the beginning of 2019, Rusgrain Holding held 50% Bashkir poultry market. However, this did not save the group from financial problems.: by the new decade, she has accumulated so much debt, that because of them she was on the balance sheet of the structure of the bank "Trust".

Composition of the group of companies. Despite, that initially Rusgrain Holding was established on the basis of a grain trader, most of its companies are engaged in poultry meat farming. Only one company operates in the grain market, one is engaged in the poultry trade, one - grain trade, the rest are holding and management. One of the group companies is registered in Cyprus, the rest are in Russia, mainly in the Republic of Bashkortostan.

Composition of Rusgrain Holding

Field of activity Share of participation
OJSC "Ufa KHP" Processing and storage of grain 100%
LLC "Trading House Turbaslinsky Broiler" Trade 99,9%
Grano LLC Trade 100%
OJSC "Turbaslinskie broiler" Meat poultry 100%
OJSC "Poultry farm" Tuimazinskaya " Meat poultry 100%
LLC "Poultry farm" Ashkadarskaya " Meat poultry 100%
LLC "Poultry farm" Ufimskaya " Meat poultry 100%
LLC Plemptitsefabrika Yubileynaya Meat poultry 100%
LLC "Russian Zerno Ufa" Management services 97%
Aravil Holdings Limited holding company 100%
Faberge LLC holding company 100%
Faberge Security LLC holding company 99%
  Обзор Acadia Pharmaceuticals: guarding the central nervous system

Shareholders and key figures. The main shareholder is PJSC National Bank Trust, to whom businessman Mikail Shishkhanov ceded his share in March 2019 due to the current debt situation. The key figure of the group of companies is President Mikhail Koshkin, he does not own shares of PJSC.

Shareholders of Rusgrain Holding

PJSC National Bank Trust 69,2%
OJSC "Ufa Plant of Bread Products" 5,04%
Free float 25,76%

69,2%

Geography of production and sales. The main production facilities are concentrated in the Republic of Bashkortostan and the Omsk region. The company supplies products to most regions of Russia, as well as to neighboring countries. There is no export to non-CIS countries.

What makes money

Trade marks. The main activity of the group of companies is the production of chicken eggs. This is the Avdon trademark, occupying 70% in the egg market of Bashkortostan. In addition to eggs of standard categories, the assortment includes eggs with a high content of microelements, as well as halal products, in demand on the territory of Bashkortostan with its predominantly Muslim population. The Turbaslinskiye Broilers trademark includes, in addition to the production of broiler carcasses, deeply processed products, sausages and rolls. All products are halal, certified by the Republican Committee for the Halal standard. Also, compound feed is produced from meat production waste.. Grain and grain products trade accounts for a very small share of the company's business.

Revenue structure. The revenue structure of the group of companies in the first half of 2021 has undergone some changes compared to 2020. The largest share is still made up of semi-finished products, what is connected, apparently, with the dietary habits of Russians, low standard of living and lack of sufficient free time for cooking. The share of these products has become even larger compared to 2020..

The share of compound feed has become higher, what can be explained by the economic recovery, negatively impacted by the coronavirus pandemic in 2020. The decrease in the proportion of broiler carcasses can also be explained by the fact, that due to the restoration of welfare, Russians began to eat more expensive types of meat - pork, beef.

The downward trend in broiler carcass revenues continued in 2021. But the growth in revenue from sales of compound feed in the first half of 2021 compared to the same period of the previous year was even higher, than for 2020. This can be related to the fact, that feed prices have reached record levels, and with that, that the production of compound feed from waste has a large margin, than, eg, from forage crops. Most of the costs in the production of compound feed are the costs of raw materials, not for production and supplements. Therefore, the conjuncture of the feed market can be assessed rather as positive for the holding., especially given the signs of the Russian economy coming out of the crisis.

Rusgrain Holding's revenue structure by years, in thousands of rubles

2020 2019 Share The change
Broiler chicken carcasses 1 368 158 1 437 131 16,98% −4,80%
Foods 3 293 067 2 501 288 40,88% 31,65%
Mixed feed 1 789 099 1 058 464 22,21% 69,03%
Meat products and eggs 1 586 001 1 100 848 19,69% 44,07%
Other 19 949 14 536 0,25% 37,24%

Rusgrain Holding's revenue structure in half-years, in thousands of rubles

1п2021 1п2020 Share The change
Broiler chicken carcasses 620 769 666 895 11,81% −6,92%
Foods 2 431 473 1 671 867 46,26% 45,43%
Mixed feed 1 495 948 809 606 28,46% 84,77%
Meat products and eggs 700 040 531 577 13,32% 31,69%
Other 7741 6197 0,15% 24,92%

Financial performance. what 2019, that 2020 was extremely unfortunate for the holding. All major financials and ratios were negative, and their decline in 2020 was simply catastrophic.

  American Bank J Review. P. Morgan Chase

It would be naive to consider, that this is the unequivocal impact of the pandemic. Quicker, this is the result of the unprofessional management of the main shareholder, who was seen in a similar way before. Lesion, truth, dropped, which can be associated with an increase in demand among the population for poultry meat - cheaper, than other types of meat. Demand rises amid falling purchasing power due to coronavirus.

Apparently, the change of the main shareholder made itself felt, since the bank "Trust" indicated, that his strategy is, including, restoration of the financial efficiency of the group. Already in the first quarter of 2021, the results have improved significantly, indicators were positive.

In the second half of 2021, there was also an improvement in financial performance compared to the same period of the previous year.. At the same time, there were no such sharp jumps in indicators., which is due to, that the company's business in the last month of the first quarter of 2020 - in March - suffered significant losses due to the peak of the pandemic. Also, an improvement in performance could have taken place in connection with the modernization of production.: re-profiling of poultry farms of the egg direction for a more marginal broiler direction, cost optimization, increase in the production of compound feed.

Based on the data, it can be stated, that such leaps in financial indicators are clearly the weak side of the group of companies.

Financial performance of Rusgrain Holding

Annual 2019 2020 The change
Return on assets −0,11% −1,40% −1176,39%
Return on equity −0,12% −4,76% −3938,04%
EBITDA, billion rubles −2,198 −0,301 86,27%

Rusgrain Holding's annual financial indicators

Quarterly 1к2020 1к2021 The change
Return on assets 0,001356% 0,017211% 1169,25%
Return on equity 0,000914% 0,01494% 1534,57%
EBITDA, million rubles 3,556 8,147 129,11%

Rusgrain Holding Quarterly Financial Indicators

Semi-annual 1п2020 1п2021 The change
Return on equity 0,00261% 0,0283% 984,29%
Return on assets 0,00347% 0,0162% 366,86%
EBITDA, million rubles 9,122 15,484 69,743%

Rusgrain Holding's semi-annual financial performance

Plans

The strategy of the group of companies is currently mainly formed by the bank "Trust", what is directly stated in the statements of the holding. Even before the acquisition of Rusgrain Holding, it was said that, that the bank "Trust", in addition to increasing the production of poultry meat, will include in its strategy the export of products to Kazakhstan, Mongolia and China, although there is no information yet about, how is this direction implemented.

As for Kazakhstan, then this direction can be promising only in terms of minimizing transport costs, since the Republic of Bashkortostan borders on it. But data on the production of poultry meat in Kazakhstan indicate that, that the country's need for these products will be covered by local producers by 2025.

Mongolia, possibly, will be a more promising market. At the moment it is one of the twenty largest consumers of Russian poultry meat. At the same time, it is a relatively new food for the Mongols., who traditionally preferred lamb. The arrival of such fast food chains on the Mongolian market, like Burger King, makes it possible to predict an increase in demand.

China is an even more promising market, the volume of imports of chicken meat there will double by 2024 compared to 2019. Given these facts, the implementation of the export strategy or at least the news of its launch can have a positive impact on the share price.

Also in the plans of the bank "Trust" to expand the production of semi-finished products on the basis of the holding's enterprises, what fits into his strategy when buying Rusgrain assets. This is good market news for the performance of Rusgrain Holding shares..

  83 000 deals per month at the morning session of the Moscow Exchange!

Risks

Exchange risks. An unpleasant moment for investors is the low transparency of the company's activities. The 2020 report only briefly mentions the plans of the holding and lacks operating indicators..

Exchange risks include the unreasonable growth of the group's shares, which is not affiliated with any news. Artificial dispersal of illiquid shares through telegram channels has already caused a corresponding reaction in the Central Bank. Not hard to guess, what if the Central Bank takes any measures in connection with the proven episode of dispersal of the securities of Rusgrain Holding, shares will fall. Also, the refusal of the management of Rusgrain Holding to pay dividends for the unprofitable year 2020 can also be included in the group of exchange risks..

The risk of loss of business reputation. Trust Bank is known for its penchant for cutting costs, harming the environment. truth, this incident did not occur at the enterprises of Rusgrain Holding, and at the enterprise of the second company, component of the bank's poultry assets: sewage was discharged into the river, saving on treatment.

But this year a scandal broke out around one of the enterprises of the holding itself.: OJSC "Turbaslinskiye Broilers" was fined for the presence of listeriosis pathogens in minced chicken - an infectious disease with high mortality. At the same time, the products of JSC are already, seems to be, caused complaints from the regulatory authorities - even before the incident, in october 2020, temporary bans were imposed on her.

There were violations before Trust: in 2015, Rosprirodnadzor collected a fine from OJSC "Bashkirskaya Poultry Farm" for dumping poultry droppings on agricultural land. In 2010, Rosprirodnadzor filed a lawsuit against OJSC "Turbaslinskiye Broilers" for storing 50 thousand tons of manure at the landfill, but the claim was not satisfied. truth, at that time, OJSC was not yet part of the holding.

Such risks can be considered significant - even if the claim is not satisfied, the reputation suffers, all this has a negative impact on the value of the group's shares.

Publications in the media can also be classified as reputational risks.. Reputational damage is especially great, when the veracity of publications is proven by the court, as it was last year with the poultry farm "Bashkirskaya" and the publication "Roskontrol". The publication in 2014 classified the products of the Avdon brand on the black list and won the court on appeal.

Outcomes

It can be stated, that Rusgrain Holding shares have upside potential - financial performance has improved significantly since 2019 and 2020, and the new management policy with the transition to more marginal areas is also bearing fruit. Export plans are also encouraging, that the current rise in stocks from the bottom will continue.

But the listed positive prospects do not cover the risks.. Exports to China look like a pretty ephemeral income line, since they are mostly in demand for chicken legs and offal. No guarantee, that the Chinese will suddenly change their food preferences and switch to broiler carcasses, but on the other side, supplying chicken feet to China looks like a more marginal business, than the production of compound feed from them.

Significant risks, associated with various scandals, fraught with loss of business reputation: of the above three enterprise lawsuits, included in groups, won one. The risk of pumping and dumping stocks through instant messengers and social networks against the background of already high volatility and low liquidity makes it meaningless technical analysis. Fundamental analysis is complicated by the low transparency of information provided by Rusgrain Holding in the reporting.

In this way, Rusgrain Holding shares are more suitable for investors, who have a lot of experience, good professional training, appetite for risk and who are ready to study in detail the news about the company found in different sources.

Scroll up