Analysis of Kernel 2016



Company: Kernel

ISIN LU0327357389 | WKN A0M7QF

Business: An Ukrainian agricultural and logistics company with its headquarters in Luxembourg. They have six different business units: Sunflower Oil in Bulk (buy sunflower seeds and crush them to oil), Bottled Oil (sold under the brand names: Schedry Dar, Stozhar and Chumak Zolota), Farming (producing all kind of crops with the new thing being rapeseed), Grain (logistic handling of bought crops), Export Terminals (export of the grain and oil via harbours) and Silo Services (storage and drying of crops before export and sale).  

Active: Agricultural production in Ukraine and Russia. The products are exported and sold all over the world according to world market prices.

P/E: 7.9

Here you can find the previous analysis of Kernel 2015.


The P/E for Kernel is excellent with 6.7 and the P/B is good with 1.5 which gives a very clear buy signal from Graham. The earnings to sales are good at 11% and the ROE is excellent with over 22%. The book to debt ratio is looking great with 1.9.
In the last five years they have had a negative growth rate of -1.6% which is very bad and this then gives us a motivated P/E of around 8 to 10 which means that Kernel is pretty close to being fairly valued by the market.
They pay out a silly low dividend in the size of 1.4% which correspond to not even 10% of their earnings which is very low.

Conclusion: Graham says yes to Kernel but I do not. Yes, all the values are looking good but I find that the values are doped due to USD valuation and, in my opinion, different valuation of biological assets. I am still shareholder but I am very uncertain for how long.

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