♦ The doubling of the valuation would come in anticipation of the transfer from AeRO to the BVB main market ♦ The compost factory, operational from Q3/2024 ♦ The company’s shares, increasing by more than 100% in the last 12 months.
Peter de Boer, board member and investor relations manager at DN Agrar Group (DN), the largest integrated farm in Romania, with cow’s milk production and vegetable production, says that the company is considering an increase of social capital for the financing of development plans and estimates that, once the investments announced in the last period are completed, the capitalization could double in the next four years.
“We will look at a capital increase; I think this is the next step in terms of development. I don’t think we will do it this year, but we are actively looking to integrate or acquire one or two farms on the Romanian market. I think it’s a good time to look at this. There are many farmers in difficulty”, says Peter de Boer.
The company reported for 2023 a net profit of 23 million lei, up 63% compared to the previous year, in the context in which the net margin rose from 9% to 15%. Against the background of the increase in milk production and the optimization of fixed operational costs and in the context of the decrease in the price of milk at the European level, the turnover remained at 151 million lei, the data from the financial report show.
DN shares are trading up 21.5% on the BVB since the beginning of the year, on a turnover of 14.7 million lei and a market value of 248 million lei (around 50 million euros).
“By the end of 2027, the beginning of 2028, we want to reach a market value of 100 million euros, which would help us in terms of the transfer to the main market of the Bucharest Stock Exchange. Bonds are not part of our strategy for the moment. I don’t think it represents a short-term solution for us”, continues Peter de Boer, guest at ZF Deschiderea de Today.
In the last 12 months, the evolution of DN shares consists of an advance of 110.7%, which means that the company has doubled investors’ money in this interval, on a liquidity of 37.6 million lei, according to BVB.
“Therefore, we are targeting a doubling of the valuation, largely by increasing the milk produced at the Apold and Straja farms, as well as by our first compost factory, which will become operational in Q3/2024. If they all operate more or less at full capacity, we expect it to be enough to reach that capitalization. We are looking at a biogas plan, which could generate additional revenue for years to come.”
About the Straja project in Hunedoara county, the representative of DN Agrar says that it is on the right track, after the company obtained a financing of 9.2 million euros from Exim Banca Românească, of which 2.5 million are directed to the animals raised in within the group.
“So it will be a transaction within the company. We are currently building the first dedicated milking sheds. We expect to milk the first 600 cows in September, which will contribute to the turnover and net profit. By the end of the year, we will have milked around 900 cows,” adds Peter de Boer.
Other statements:
I would start with the high volatility we had throughout the year regarding the price of milk. If we compare T4 with T1, we had a price reduction of almost 40%. So it’s a huge discrepancy.
In addition, although we had an increase in milk production, it was at a slower pace. So, in terms of year-over-year efforts, we had an increase of almost 16% in the first nine months. And in the last quarter, we only had an increase in milk production of 7.8%, almost 8%. This was mainly due to the fact that we had many pregnant cows. And when cows are pregnant and in the last stage of pregnancy, they do not produce milk. But, of course, they keep eating, so we have costs here too.
This can also be seen in January and February of this year, when we recorded a significant increase in milk production. It is largely due to the fact that we have more animals. In the first month of 2024, we have a 19% increase in milk production.
We invested in expanding the capacity at the Apold farm. We will conclude the contract at the beginning of the year, as we rent that place, which has an effect of 3.8 million. In this case, it would be a negative effect, but it will help us to have fat 24/7, to have stricter control over the quality of the cattle
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