Investment Thesis:
- Market Leadership in the
Rostov Region ,Russia . Don Agro has been operating as a single entity for more than 10 years, a result of the privatisation of five collective farms. The group's good financial track record can be attributed to the experienced gained and the structured and hands-on farm management practices, which continue to be overseen by a senior management team who has been with the group since 2012. - Acquisition-led growth, supported by a healthy balance sheet. KGI expects growth to be primarily driven by acquisitions. With the purchase of
Volgo-Agro LLC in 4Q2020,Don Agro added around 10,040 hectares to its land bank, increasing it by 19% to 63,240 hectares as at end-2020. The group is in a robust financial position to embark on more acquisition-led growth and to invest in new machinery, thereby increasing production yield. The Group has generated positive free cash flows since 2018 and was in a net cash position ofS$7 million as at end-2020. - Meeting the demand of a growing world.
Don Agro's key products (wheat, sunflower, corn, and raw milk) are witnessing global demand growth. The OECD-FAO forecasts that the expanding global population remains the key growth factor for agricultural demand.
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