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13-02-2020, 09:44 PM
DON AGRO: First Russian company to list on SGX, trading starts Fri
Written by Leong Chan Teik
Published: 13 February 2020
Don Agro will make history tomorrow (14 Feb) as the first Russian company to ever list on the Singapore Exchange.
At a market capitalisation of S$33 million on listing, this relatively small business sees itself as a growth stock.
And it will propose to pay dividends when it announces its FY2019 results next month (March).
It intends to pay up to 20% of its net profit attributable to shareholders for FY19, FY20 and FY21, it said in its IPO prospectus.
Its Catalist listing has raised S$5.1 million in gross proceeds and S$1.3 million in net proceeds -- that is, listing expenses amounted to S$3.8 million.
Some things about Don Agro, given its Russian roots which are unfamiliar to investors in Singapore, may surprise, including the fact that it is ...
a) exempted from tax on its agribusiness profits,
b) it pays rent in kind (grain, sunflower oil, etc) to some landowners, and
c) it requires customers' payment before delivery of its produce.
There are many other business factors, including risks, that are unique to Russia which can be gleaned by reading its IPO prospectus.
As a limited snapshot, here are 10 things to know about Don Agro:
1. Agribusiness: While it cultivates a range of crops, winter wheat is by far the N0.1 revenue contributor.
2. Favourable weather, fertile land: Don Agro operates in the Rostov region whose weather is favourable for the cultivation of winter wheat and sunflower.
3. Vast land: Don Agro has a controlled land bank of 53,200 hectares. Of that, approximately 41,167 hectares are arable land -- or about 41,000 football fields.
4. Strong seasonality effect: The harvesting of winter wheat and sunflower (for the making of sunflower oil) takes place in the second half of the year.
5. Revenue/profit trend: On S$24.4 million of revenue in 2018, the gross profit was S$9.1 million, including S$6.7 million in fair value gain of biological assets and agricultural produce.
6. Fair value of bio-assets: Fair values are based on assumptions such as the level of expenses, market prices of agricultural produce, discount rate, yield and production usage.
7. Pay before delivery: Don Agro says it typically sells its products on a prepayment basis but it may give credit terms of up to 5 days on a case-by-case basis.
8. Agribusiness is tax-free: In Russia, there is zero tax on profits from agricultural businesses since 2011.
9. Harvest outlook: Agribusinesses are subject to weather risks.
10. Milk outlook: "We expect that the demand for and the prices of our milk will continue to be stable in 2019 and 2020... As the dairy business is labour intensive, with the increase in the Russian monthly minimum wage from RR9,489 to RR11,163 from 1 May 2018 onwards, we expect our labour costs to increase, although such increase is not expected to be significant."
More details in https://www.nextinsight.net/story-archiv...starts-fri
See also IPO propesctus
Written by Leong Chan Teik
Published: 13 February 2020
Don Agro will make history tomorrow (14 Feb) as the first Russian company to ever list on the Singapore Exchange.
At a market capitalisation of S$33 million on listing, this relatively small business sees itself as a growth stock.
And it will propose to pay dividends when it announces its FY2019 results next month (March).
It intends to pay up to 20% of its net profit attributable to shareholders for FY19, FY20 and FY21, it said in its IPO prospectus.
Its Catalist listing has raised S$5.1 million in gross proceeds and S$1.3 million in net proceeds -- that is, listing expenses amounted to S$3.8 million.
Some things about Don Agro, given its Russian roots which are unfamiliar to investors in Singapore, may surprise, including the fact that it is ...
a) exempted from tax on its agribusiness profits,
b) it pays rent in kind (grain, sunflower oil, etc) to some landowners, and
c) it requires customers' payment before delivery of its produce.
There are many other business factors, including risks, that are unique to Russia which can be gleaned by reading its IPO prospectus.
As a limited snapshot, here are 10 things to know about Don Agro:
1. Agribusiness: While it cultivates a range of crops, winter wheat is by far the N0.1 revenue contributor.
2. Favourable weather, fertile land: Don Agro operates in the Rostov region whose weather is favourable for the cultivation of winter wheat and sunflower.
3. Vast land: Don Agro has a controlled land bank of 53,200 hectares. Of that, approximately 41,167 hectares are arable land -- or about 41,000 football fields.
4. Strong seasonality effect: The harvesting of winter wheat and sunflower (for the making of sunflower oil) takes place in the second half of the year.
5. Revenue/profit trend: On S$24.4 million of revenue in 2018, the gross profit was S$9.1 million, including S$6.7 million in fair value gain of biological assets and agricultural produce.
6. Fair value of bio-assets: Fair values are based on assumptions such as the level of expenses, market prices of agricultural produce, discount rate, yield and production usage.
7. Pay before delivery: Don Agro says it typically sells its products on a prepayment basis but it may give credit terms of up to 5 days on a case-by-case basis.
8. Agribusiness is tax-free: In Russia, there is zero tax on profits from agricultural businesses since 2011.
9. Harvest outlook: Agribusinesses are subject to weather risks.
10. Milk outlook: "We expect that the demand for and the prices of our milk will continue to be stable in 2019 and 2020... As the dairy business is labour intensive, with the increase in the Russian monthly minimum wage from RR9,489 to RR11,163 from 1 May 2018 onwards, we expect our labour costs to increase, although such increase is not expected to be significant."
More details in https://www.nextinsight.net/story-archiv...starts-fri
See also IPO propesctus
Specuvestor: Asset - Business - Structure.