Recently, the company Agroliga was visited by its actual shareholders from Poland.
There were the same 2 people, who were among the first, who believed in us back in 2011, in the period, when company was just entering the Polish stock market. And speaking without undue modesty, we fully met their expectations! On their two-days visit, the shareholders had time to visit the old and new oil plants, as well as meet with company management. The result of this visit is a huge thank-you letter and an analytical article, which will be published already this week on one of the largest portals for small and medium-sized investors in Poland – https://www.stockwatch.pl.
We will publish only a small part of the letter, in which our shareholders share their impressions.
«Since its debut on the NewConnect market, the company has consistently carried out an ambitious investment program, consisting of increasing the area of arable land, increasing the number of dairy livestock and expanding the production capacity of sunflower oil, building a completely new plant in the New Vodolaga. Since 2011, the company annually shows profit, constantly increasing revenues from agricultural production.
As shareholders, for some time we hatched an idea to see the work of the company with our own eyes. Knowing, that the deadline for completing the investment of the new plant is approaching, I wrote to the company and we received an invitation.
During our stay we visited the old and then the new plants of the sunflower oil production. The difference is really huge – the new plant makes a colossal impression – especially the size of the plant. Production is automated and production waste is used to produce compressed steam at a pressure of 15 atmospheres, which is then used in other technological processes. A special laboratory at the factory conducts continuous 24-hour monitoring of the parameters of finished product. As a result, we saw the desire for maximum efficiency in the production process. The plant was launched – the official cutting of the “red” ribbon took place on October 27, 2018.
A few photos of our visit to the new plant:
However, our visit was not limited with the inspection of production facilities. We also met together with Mr. Alexander Berdnik and Ms. Irina Poplavskaya at the main Kharkov office of the company to talk about the future of Agroliga.
Plans: further growth of the company by increasing the profitability of the oil refinery in two directions: logistics and raw materials. Logistics – the plan is to purchase about 30 railway tankers, which will provide economical transportation of the product for export. The second question is the increasing of land resources. Currently, the company processes about 10 thousand. ha of leased land. Another 10 to 20 thousand ha are within the reach of the company in order to increase the scale of crops.
Risks: price volatility for basic products and security issues (the company intends to ensure the stability of prices for products using contracts – the problem is that grain prices cannot be translated in a 1: 1 ratio, in Ukraine there are some price differences). Currently, prices for agricultural raw materials are quite low. Also should be added the reduction of support for agriculture by the central authorities of Ukraine. Investors are still discouraged by the probability of the war returning or, for example, blocking Ukrainian ports by the Russian navy, which can lead to a significant increase in costs for agricultural companies.
Ms. Irina said in an interview, that company owes a lot to the funds obtained from the previous issue of shares. Currently, after the start of investment and the completion of a certain stage of development, it is time to share success in the form of a dividend with shareholders, starting with the profit of year 2018. For investors, who were able to observe only the organic development of the company, this should be valuable information, which signifies, that the company does not forget about them. Ms. Irina clearly emphasized this, and we are waiting for specificity about the resolutions for the general meeting. A permanent dividend policy is exactly what investors value.
Finally, a return to plans for the transition to the main market and the related problem. For obvious reasons, the company’s transition to the main market was blocked a few years ago; now the company plans to return to these plans. The main goal is to raise funds for the purchase of land. Currently, Ukraine has a moratorium on the purchase of land, but due to pressure from Western countries, through the IMF, from January 1, 2019, the moratorium should be lifted.
The company must prepare for this, especially since it has the right to buy out the leased land (rent from private owners for 49 years). Moreover, land prices are very low from our point of view (about $ 1000 / ha). We heard from both major shareholders, that in the past they received offers to buy out a company from larger players.
Despite planning further investments, Agroliga understands the need to care about reputation and credibility in the eyes of investors, which can be a decisive factor, when switching to the main market of the Warsaw Stock Exchange. To this end, the company intends to:
– take care of communication with investors, regularly publish messages on the website.
– organize a meeting with investors in Warsaw once a year.
– start paying dividends from the company’s profits.
We sincerely hope, that our visit will help the company and its shareholders. We would like to thank Mr. Alexander Berdnik, Ms. Irina Poplavskaya and Mr. Jan Poplavsky for showing us the company and taking the time to talk».
The style of the authors of the letter has been preserved.
With kind regards, team of GC «Agroliga».