IMC | Completion of 2023 sowing campaign, area sown up from 73% in 2022 to 93% currently
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IMC completed the spring sowing campaign 2023. A total of 32.2 thousand hectares of sunflower and 46.3 thousand hectares of corn were sown.
Given the 33.4 thousand hectares of wheat sown earlier, as of today 93% of the Company's land bank is sown in 2023 production season compared to 73% in 2022 production season.
IMC
Recommendation*: Buy 12M TP*: PLN 22.56
"Due to the rainy and cool March and April, the spring sowing campaign in IMC started only on April 20. However, we managed to carry out this sowing in close to optimal terms. This year, the area under spring crops in IMC is somewhat smaller than traditionally, given the almost two-fold increase of winter wheat crops in the 2023 crop mix", - commented Oleksandr Verzhykhovskyi, Chief Operating Officer of IMC.
Our view: NEUTRAL
The information is fully in line with our expectations. In our previous company update dated back to September 2022 we pointed out resuming full production from 2023 onward. This is why we read the information as neutral.
What has been instrumental to the recent rally of IMC shares and could be the reason for further gains is falling geopolitical risk in the eve of Ukraine counteroffensive. Push back of Russians or even local victories could change the perception of the street toward Ukrainian companies, the more so we indicated earlier the company’s valuation suffered from increased discount for geopolitics.
On the flipside, the falling grains prices and the risk of termination of grain deal as a consequence of fights intensification and defeats on the battlefield, could have negative impact on company’s valuation.
The company again postponed publication of 2022 and 1Q23 results’ reports but we hope this week we finally learn about financial condition of IMC group.
*Recommendation and target price from our report dated 16 September 2022
Krzysztof Kozieł, CFA
krzysztof.koziel@pekao.com.pl
