Yesterday Erste Bank released report with several forecasts regarding Astarta’s results for 2011 as well as several projections for the future. We
would like to share a short summary of the report with our readers and comment on the facts stated in the report. Primary statement of Erste Bank is
a buy position on the company with a set target price of PLN 80.2 target price compared to 63.5 PPS recorded on Wednesday, March 14, 2012. The
recommendation however was reviewed from previously estimated PLN 139.22 target price due to various factors which we will mention in this brief.

First of all we may note strong improvement that company has been showing over the previous year compared to 2010. Net Revenues growth of
46% to the level of EUR 320.8 M and EBITDA increase by 19.5% to EUR 120.4 M are truly impressive, especially considering volatile conditions in
Eurozone last year and political instability in Ukraine. Nevertheless what is also remarkable is that Erste Bank while projecting growth of total sales
prognoses drop in EBITDA for 2012. Analytics state three main reasons for such downgrade (previous forecasts indicated growth).

• First of all, there are additional risks for the national currency of Ukraine (UAH) which is expected to depreciate in value in the end of 2012 – beginning of 2013.
• Second, there is a projected decline in harvested areas of sugar beet and grains in 2012-2013.

• Third, commodity prices, especially sugar and wheat (as you may also note on the first page of UAIndex Daily) have been on decline over the previous year. The projections of Erste Bank analysts allow room for even lower price trend down 18-28%.

Given these three facts we can see how despite growing sales expenditures per hectare will rise at even higher rate, to slow down EBITDA growth.
Further analysis of Erste shows constant increase in Weighted Average Cost of Capital (WACC), increasing the average cost of funds attracted by
the company.

AgroInvest comment: It may be noted that the major factors that will negatively affect company’s operations are the external ones, indicating that
company’s management is highly effective and the company itself has a strong growth potential. We would love to see better risk management in
terms of diversifying company’s target market in terms or exporting (since all of the company’s revenues are UAH-based).

AgroInvest