Withdrawal of the Russian Federation from the grain deal raised the shares of the Novorossiysk Bread Products Plant by 43%

The shares of the Novorossiysk Combine of Bakery Products became the first beneficiary of the withdrawal of the Russian Federation from the grain deal. At the auctions of the Moscow Exchange on July 17, their quotes grew by more than 43%, updating the historical highs in terms of value and trading volume. But even in the first half of the year, that is, under the terms of the agreement, the company showed high operating results – experts consider the current significant jump in quotations to be speculative and risky for stock market players.

Against the backdrop of generally moderate trading on the Moscow Exchange on July 17, shares of the Novorossiysk Grain Plant (NKHP) clearly stood out. Their quotations grew during the main session by 43% and reached 1.1 thousand rubles, having updated the historical maximum reached at the end of June. The volume of trading also reached a record for the entire period of circulation of shares on the stock exchange, amounting to 2.25 billion rubles. The result turned out to be higher than for the “blue chips” – the shares of Norilsk Nickel and Rosneft. The exchange index following the main session rose by 0.5% to 2917.61 points. The volume of trading in shares from the index amounted to just over 53 billion rubles.

The surge in NKHP quotes occurred at the very beginning of the trading session, coinciding with news of the official release Russia from the grain deal. NKHP transships grain crops for export by water transport in the Black Sea basin, explains Evgeny Kalyanov, an expert on the stock market at BCS Mir Investments. Against the backdrop of news that grain will not be transported from Ukrainian ports on the Black Sea, investors created a rally in NKHP shares, he said.

Apart from NKHP, there are almost no companies on the Russian stock market that are directly affected by the deal, adds Arikacapital strategist Sergey Suverov, except, perhaps, food producers like Rusagro and Cherkizovo, for which feed prices on the domestic market may become cheaper.

The growth of NKHP quotes is due to a combination of good operating performance of the company and favorable fundamental conditions in the market for storage, transportation and processing of grain, says independent financial analyst Andrei Barkhota. Fundamentally, the extension or termination of the grain deal has a moderately positive impact on the issuer’s performance, the analyst believes. The extension of the grain deal, according to him, entails the potential for expanding exports, while its termination is an increase in grain prices.

At the same time, according to the chief analyst of Regblok Anna Avakimyan, as practice has shown, the issuer is resistant to changes in logistics and geography of deliveries. The adaptation period is no more than two to three months. Such a high adaptability to sanctions and an almost 1.5-fold increase in shipments are of interest to investors, she believes. However, the replacement of dynamics may cause not only changes in the format of grain contracts, but also an increase in interest rates in the Russian Federation in the near future, Anna Avakimyan added.

According to Mr. Kalyanov, the growth of quotations “looks speculative”, and, given that NKHP papers have low liquidity, players participating in a risky trend “may lose more than gain.” In his opinion, after the cancellation of the transaction, “a significant increase in demand for the services of the port transshipment complex of NKHP is not worth expecting.”

Meanwhile, the company has benefited not only from the disruption, but also from the expectation of maintaining the agreement.

Over the past two weeks, most analysts predicted the extension of the deal, which would allow NKHP to maintain a high dynamics of operating indicators and provide a good dividend income. The company has already announced the payment of dividends for 2022 (the register was closed on April 12) in the amount of 14.62 rubles. per share, which gave a little more than 2% dividend yield. Good prospects for dividend yields attract investors’ interest in NKHP shares, Mr. Barkhota admits, but the upside potential is “restrained”.

Ksenia Kulikova