OREANDA-NEWS. August 4, 2011. Cherkizovo posted its 1H11 operating data today (2 Aug). Key takeaways include:

- Volume growth for 1H11 came in slightly below our annualized estimates, but it did not include Mosselprom which was consolidated by Cherkizovo only in mid-May.

- Meat price performance was strong: Cherkizovo’s average realized price was up 12% YoY in dollar terms.

Bottom line

Rising meat prices coupled with weakening grain prices (thanks to the harvest returning to normal) should support improvements in Cherkizovo’s margins towards year end. Additionally, Cherkizovo has increased its poultry capacity via the Mosselprom acquisition. As a result, we should see a strong performance in 2H11 when Mosselprom is fully consolidated into Cherkizovo’s financials.

The stock has been performing well recently gaining roughly 10% over the last fortnight and we don’t expect the 1H11 results to cause any immediate reaction by the market. However, we maintain our bullish stance on the name given its strong fundamentals and low valuations: Cherkizovo is currently priced at considerable discounts to its EM peers on 2011-13 P/E.