Evgeny Tugolukov
00:00 — 17.02.2022 / Media coverage

DON AGRO: 2 years on, share price has doubled on milestones achieved

Q&A with Marat Devlet-Kildeyev, CEO of Don Agro International 


Don Agro is that rare Russian company listed on the Singapore Exchange. In the past two years since its IPO, what are the financial milestones that the Group has achieved?

Because we are talking about Don Agro’s two year listing anniversary, I can say that one of the main achievements so far is the 81.8% increase in our share price. 

The listing of our shares at the IPO were at S$0.22 per share, and now we are proud that it is at the S$0.4 level. Our team has been constantly working to deliver operational and financial performance so that those translate and help to increase our shares price.

As at his last updated report on the stock, KGI Securities’ analyst, Joel Ng, has given an upside potential for our stock and has put a target price of S$0.64 per share.

We agree with this recommendation and believe that our shares have the potential to reach S$0.64 per share given our commendable progress over the last quarters.

Don Agro has a stable track record of profitability over the last five years, with net income reaching a record of S$8.69 million in 2020. 

We have not published the FY2021 financial report yet, and I will be giving more colour on financial performance with numbers from FY2020.

• The Group recognized a 41.5% yoy increase in gain from change in fair value of biological assets and agricultural produce to S$9.2 million for FY2020.

The gain was mainly attributable to the trend of rising agricultural produce prices globally, especially for sunflower and wheat which Don Agro produces.

• As a result, gross profit grew 70.3% yoy to S$14.6 million for FY2020, while gross profit margin expanded 23.0 percentage points to 47.2% for the same period.

• Overall, the Group delivered a 66.5% yoy increase in net profit to S$8.7 million for FY2020.

To show you a bigger picture and the robustness of our balance sheet, here are comparisons of FY2016 and FY2020 results, with 74.7% growth in total assets, 120.3% increase in total equity, and only 14.8% growth in total liabilities.

Don Ago continued delivering good results in 2021 as well. For the 1st half of 2021 (HY2021), Don Agro delivered a revenue of S$9.4 million, up from S$6.9 million for HY2020. The net profit after tax was S$4.8 million for HY2021, up from S$4.4 million previously. 


    • After Don Ago’s share price has nearly doubled, what else can investors look forward to?

In my opinion, Don Agro is undervalued, and we have the same feedback from some of our investors.

The Company shows a year-to-year increase in practically every important indicators. Our net profit margin is higher compared with others in the agricultural market. We constantly improve our yields, strategically acquire new land, implement new technologies, so the rise of the share price is just a matter of time.

    • During its IPO, Don Agro had outlined plans to expand its arable land bank. Have the plans materialized? What other operational breakthroughs for the Group since IPO?

Since 2020, the Company increased its land bank by 26.5% or 14,100 hectares. When we started our journey on the SGX, we had around 50,000 hectares of controlled land of which 40,000 hectares were arable land.

Within it the Group owned approximately 14,000 hectares of the total with the remainder leased. Now Don Agro has a controlled land bank of 67,340 hectares with 54,420 hectares of arable land in it and now we own over 17,200 hectares of it. I think that we have made commendable progress in increasing the hectarage in these two years of listing.

The expansion of the arable land bank is one of three main directions in the Company’s development, that’s why we don’t plan to stop at this point.

The second important thing for us is the implementation of green technologies and sustainable practices. We work on the reduction of the Company’s ecological footprint and in general, try to have an intelligent agricultural business.

Since 2020, we’ve implemented several technologies such as an autonomous driving system for agricultural machinery for crop harvesters. It helps to improve productivity and reduce the consumption of fuel and carbon dioxide emissions by 5%. The Company also uses AI-based technology in monitoring the feeding of the dairy herd and their well-being.

We are one of the first agricultural companies in the Rostov region of Russia to implement the “no-till” farming method. In 2021, the Company used it on over 7,000 hectares of land. There are also many more other initiatives that should give us an efficient result such as, cooperation with Smart Polymorph for bio-stimulants to improve crop yield, usage of eco-friendly fertilisers based on sapropel.

The Group aims to produce organic wheat because we see the market’s interest and demand in it. Actually, we’ve already harvested the winter wheat from the plot of land where no fertilisers were added, but according to the rules for USDA Organic Label, we need to continue the program for three years.


• On 25 Jan 2022, we announced the cooperation with Cargill, one of the top agricultural companies in the world, that will provide nutrition for the biggest farm of Don Agro. This collaboration should increase the efficiency of dairy farming at Don Agro through increasing milk yield, improving animals’ health and reducing costs. (More info here)

• Don Agro has started to use sediments from the bottom of lakes to fertilize arable land as the Group launched a joint pilot project with Russian startup Octaviana, which produces a new concept of organic fertilizers called Live Soil. These new plant growth bio-stimulators are expected to raise crop yields and minimize production costs. (More info here)

Commodities have surged in price to decade highs and has led to sustained inflation. Has the Group benefited from this trend and do you expect this to reverse in the short term?

Wheat demand, which is the key driver of the Group, is forecasted to grow by almost 18% from 2019 to 2029, according to estimates by the US Department of Agriculture’s Foreign Agricultural Service (USDA FAS). Furthermore, wheat, as a staple food source, provides a resilient revenue stream for the Group despite changing economic trends.

Luckily Don Agro has benefitted from inflation in food prices even though the fertilisers prices are also on the rise. There are two general reasons for this. Firstly, local commodities prices depend on the world commodities exchanges. The company sells its commodities on a tender basis, that’s why we can always wait for better prices.

This is at the same time, an answer to one of the most popular questions from our investors about revenue volatility in our reports. Sometimes we sell our grain out of the harvesting year, thus shifting recognized revenue to the next half-year results.

Secondly, most of the Company’s costs are in Russian Ruble while income is in US Dollar, a trending depreciation of Ruble against USD has increased the value of income received while minimizing impact of local costs. 

In 2021, Don Agro had an 8.9 thousand tonnes growth in total crops harvested, plus the class of the winter wheat was upgraded to the 13.5% content of protein, which commands up to US$5 more per tonne (CBOT). Thus, we have made good progress in both increasing our tonnage and also in upgrading our winter wheat to command a better ASP.

    • Was Don Agro or its customers impacted by the COVID-19 induced supply chain crisis?

It is difficult not to be impacted by COVID-19 nowadays. We are very attentive to all measures that need to be adhered to since day one including temperature monitoring in the office, mandatory masks to be used by everyone in the building, and so on. Unfortunately, our staff was infected somehow, but we provided full support and necessary healthcare to them and in the process managed to solve this problem without any economic damage to the company.

About the supply chain crisis, we have not noticed any immediate impact. In terms of operations, we sell our agricultural produce primarily to grain traders and exporters on a tender basis where key international and local traders are invited. The main operating division of Don Agro is located in close proximity to international ports, operated by international traders such as Cargill, Bunge, and Glencore. It helps our customers to save on transportation costs and offer us better pricing.

One more thing, we’ve expanded our storage capacity by 50% in 2020 and invested more than S$1.9 million in it. This initiative allowed us to store larger amounts of wheat and sunflower seeds for longer periods with the intent to sell more during peak pricing periods. At the moment, we have a grain storage capacity of up to 103,000 tonnes.

    • In its M&A strategy, what are key considerations of the company?

We have several projects in the pipeline and will continue to follow our strategy which is to have an intelligent agricultural company with an increasing land bank that is always open to greentech innovations.

First of all, the main benefit of having an agricultural business in Russia is the fact that there are plenty of options for future acquisitions and expansion. Secondly, we’re exploring new fields and segments we can participate in, but I can’t make any forward-looking statements.

In general, food is a necessity to people, that’s why the demand for food will remain stable all of the time. This is the main reason of investing in Don Agro.

    • How has Don Agro benefited from Russia’s Food Security Doctrine to increase food independence in Russia? Are there plans to continue to harness these government policies or to mitigate should policy change?

Because of the Food Security Doctrine, Russia has become the world’s largest wheat producer from an importing past. Don Agro benefited from this as we receive government subsidies annually to help us invest in machinery and the soil itself.

I can’t comment on state decisions and plans, but we have an experienced team that I’m sure is ready to adapt to any policy changes when the need arises.