June 02, 2015

Kernel managed to expand its EBITDA by 54% YoY in 3Q15 (Jan­Mar’15) to USD 115mn. The main drivers were a 4­year high crushing margin of USD 278/t in bulk oil segment and much better results in the farming segment. The group reduced its net debt by 47% YoY to USD 482mn thanks to almost doubled operating cash flows to USD 253mn. As a result, Net debt/EBITDA stood at comfortable level of 1.1x as of end­Mar’15. While we raise our expectation for FY15 EBITDA to USD 415mn, we pencil in lower EBITDA in FY16 at USD 320mn due to the expected drop in the crushing margin. We revise upward our target price for the KER stock to PLN 56.50. BUY.