September 09, 2013

MHP expanded its poultry production by 18% YoY in 1H13, strengthening our confidence in its ability to reach annual output of 600,000 tonnes by 2015. We expect the company to export the lion’s share of the incremental rise in production; in 1H13, MHP successfully tripled YoY its poultry exports. After a slip in the EBITDA margin to 29.0% in 2013, we project a recovery to the FY12 level of 33.3% in 2014, driven by higher poultry prices and lower poultry production costs. Our target price of USD 22.10 per share implies a 41% potential upside and a BUY recommendation for the MHPC stock.