Ukrainian companies and companies with significant Ukrainian exposure in which you can invest

Ukrainian companies and companies with significant Ukrainian exposure in which you can invest

Ukrainian exposure can be obtained not only with direct investments in Ukrainian assets but also through different Ukrainie-exposed stocks and Eurobonds / military bonds.

Astarta Holding N.V (ASTH, WSE)

One of the largest agro-industrial holdings in Ukraine:

• 220 kha under management; 
• sugar production: №1 producer in Ukraine with 250 – 500 thousand tons of sugar production per annum; 
• cattle farming: №1 producer of industrialized milk in Ukraine with more than 100 thousand tons of milk production per annum and 25.5 thousand heads of cattle; 
• soybean crushing: №2 in soybean processing in Ukraine with a crushing capacity of 230 thousand tons;
• bioenergy: designed daily capacity of 150 thousand m2 of biogas;

At the beginning of the full-scale invasion, Astarta's shares lost nearly 70% of their value compared to their early 2022 levels. As of May 2024, the stock price stands at 26 PLN, down from 40 PLN at the start of 2022. However, since the beginning of 2023, the stock has experienced a 20% increase.

The annual financial report for Astarta gave hints on how the company was doing in 2023. Revenue grown by (+21%) from EUR 510 to 619 mln, with the main contributor being agriculture which contributed 38% of consolidated revenue and grew by (+33%) y-o-y. EBITDA declined from EUR 154 million to 145 mln for of about –(-6%). The growth in terms of revenue could be explained through increased production volumes of crops and sugar while reduced EBITDA and growing cost of sales represent higher costs for exports as well as higher management fees.

Ovostar Union N.V. (OVO, WSE)

One of the largest egg producers in Europe:

• Near 7 million laying hens; 
• Ovostar Union supplies 55 countries with fresh eggs; 40% of total sales are exports;
• Manufacturing eggs in various forms: liquid, in-shell, dry;
• Revenue in 2022 was USD 135.6 million.

From the beginning of 2022 to its lowest point, OVOSTAR's share price lost up to 45% of its original value. However, from the start of 2023 to May 2024, the share price increased by over 50%, reaching 67.80 PLN. This increase restored the stock price to its pre-invasion level.

MHP (MHPCq, LSE)

MHP is the largest integrated Ukrainian producer and exporter of poultry and crops, as well as other meat and sausage products and ready-to-eat meat products.

The company specializes in the production of poultry and, in particular, the cultivation of cereals: 

• The leading producer of poultry in Europe with one of the strongest food brands in Ukraine, producing almost 670 thousand tons in 2022; 
• One of the largest grain producers and oilseeds processors in Ukraine with significant growth potential (340 ths ha of arable land in 2022 under management);
• At the beginning of the full-scale invasion, the MHP shares lost about 50% of their value compared to the beginning of 2022 and as of February 2024 remain on the same level (slight growth of 10% since the beginning of 2023).

Export revenue increased by (+13%) in 2023 year.Revenue for the 2023 grown from USD 2,6 to 3 mln (+14%) compared to 2022, EBITDA increased by (+16%) - USD 384 to 445 mln.

Mlk Foods Public Company Ltd / Milkiland (MLK, WSE )

MLK Foods is an international dairy producer with core operations in the CIS and EU:

• The Group’s production assets are located in Ukraine. The total annual milk processing capacity exceeds 500 thousand tons; 
• Controlled through the Group’s subsidiary Milkiland Ukraine and includes milk processing 10 diary processing plants, dairy farming, and an extensive milk collection system throughout Ukraine.

Stock prices have fallen 67% from the end of 2021 to the lowest point in 2022 year and additionally lost 35% from the beginning of the 2023 till May 2024, as the Company used to have financial issues before full- scale invasion and war only increased the pressure.

IMC SA (IMC, WSE)

IMC – is among top 10 Ukrainian agriculture companies operating 120 thousand hectares of arable land in key farming regions of Ukraine (Poltava, Chernihiv, Sumy). 

Revenue increased from USD 61.8 to 98.7 mln (+60%) in 9M 2023 compared to the same period of 2022 year. EBITDA decreased from USD 36.8 to 13.8 mln (-62%), due to decrease of crop prices in 9M 2023. 

In 2023 revenue increased from USD 114 to 139 mln (+22%) y-o-y. EBITDA decreased from USD 36 to 3mln (-91%), due to drop of oilseeds and grain prices as well as raise of sales cost.

EPAM Systems Inc (EPAM, NYSE)

EPAM is IT company named a Forbes global 2000 company in 2011, works in over than 50 countries:

• 55 600 employees worldwide, largest number of EPAM employees is in Ukraine – 11 300; 
• EPAM is part of the S&P 500 index since 2021.  

In 2022, EPAM's revenue reached USD 4,824 million, marking a 28% increase from USD 3,758 million in 2021. Net income also saw growth, with a rise of over 13% in 2022 to USD 481.7 million, up from USD 419.4 million in the previous year. 

Military Bonds

Ukraine has issued a series of war bonds to raise financing and support the army. These bonds can be purchased by Ukrainian legal entities and individuals, as well as foreign investors who want to support Ukraine. The bonds can be nominated and purchased in UAH, USD, or EUR. The most recent auction held on January 30, and issued bonds equivalent to UAH 1.6 BLN.

The war bonds offer up to an 18.5% yield, which surpasses the US Treasury bill, which offers max yield of 5.35%.

Ukrainian Eurobond

Ukrainian sovereign Eurobonds have been under significant pressure since the onset of the war. Approximately 50% of the Ukrainian budget (specifically its social component, excluding the military) is supported by international donors. Given this, restructuring of at least the upcoming issues seems plausible. As of February 2024, the YTM for the upcoming Ukraine 24 was a staggering 396%. Longer-duration bonds exhibit lower YTM but are still trading between 23-31 cents per USD/EUR. 

There's also a unique instrument – the GDP-linked Warrants. In 2015, Ukraine issued GDP warrants worth $3.6 billion to make its restructuring of $15 billion of debt more appealing. This restructuring required investors to write off 20% of the original value of their assets. However, these warrants provide a potential benefit linked to GDP growth between 2021 and 2040. If the real, inflation-adjusted GDP growth surpasses 3%, Ukraine commits to paying warrant holders an amount equivalent to 15% of the economic output exceeding this threshold. This percentage escalates to 40% if the growth surpasses 4%.

Eurobonds from the corporate and banking sectors have demonstrated better resilience compared to the sovereign ones, attributed mainly to a healthier financial situation. This is particularly true for the banking sector, where liquidity has reached an all-time high, thanks to successful reforms implemented between 2015 and 2016. Some entities, like MHP, plan to repurchase a portion of their own bonds, viewing it as a strategic investment given the prevailing circumstances.

Canada Ukraine Sovereignty Bond

If you want to support Ukraine with your investment, then Ukraine Sovereignty Bond can be a stable option. These are bonds, issued by Canada for five years for CAD 500 million. The bonds are issued in Canadian dollars and have an interest rate of 3.245%. According to the terms, the Canadian government will transfer the funds collected from the sale of bonds to Ukraine through the IMF Administered Account for Ukraine. 

Military Tech

Investment in Ukrainian military technology (MilTech) startups has been on the rise since the start of the Russian invasion in 2022. Ukrainian government is actively supporting the MilTech industry through schemes such as Brave1 MilTech start-up accelerator which for this year it has a $40m fund for.

More than forty five MilTech companies operate publicly within Ukraine, but hundreds more are operating anonymously and in stealth mode with their focus primarily on air, sea and ground drones as well AI systems to enhance drone accuracy and electronic warfare (EW) equipment for defense against enemy drones and their EW.

Funding MilTech startups does not only support Ukraine’s defense efforts but also makes an attractive business case for investors who seek fast growing organizations that can impact globally as active phase of war provides unique opportunity to test all the new systems on battlefield skipping a number of intermediate stages to final practical result.

Moreover, MilTech includes not only offensive technologies but also defense in all means starting from early detection to passive and active defense systems

Some of the major Ukrainian MilTech firms include: 

• TELETACTICA - Established in 2023 TELETACTICA designs long-range radio communication systems (EW-resistant telemetric and video communication modules) and offers R&D support services to local businesses.
• Promin Aerospace - Founded by Misha Rudominskyi, Promin Aerospace is working on innovative aerospace technologies: the company created a rocket that can deploy payloads into orbit in a revolutionary new way by using the proprietary method of gasification and subsequent burn of the solid fuel tank material in the rocket engine
• Himera - Co-founded by Misha Rudominskyi and Oleksii Oliynyk, Himera focuses on developing cutting-edge military technologies focusing on secure and EW-resistant communication system (FHSS technology) which can be used as a part of operational awareness system during combat operations
• UKRSPEC Systems – Founded in 2014, at the beginning of the russian intervention. Producing one of the most famous Ukrainian fixed-wing and rotor drones. Famous for their SHARK drone observing systems which include a full system, complicated with UAV software and camera gimbal
• GRISELDA – a relatively small company, with high ambitions for the development unique observing system. Their main aim is to process large streams of data and provide analysis through Neural networks and other modules. Ther famous DeepState map is created in collaboration with GRISELDA.
• Piranha-Tech – a company founded in 2014m specializes on manufacturing of EW systems. Their solutions create protective jamming domes against satellite navigation and drones. Piranha-Tech are famous for compact design and high reliability of their products.
• SkyLab UA – Established in 2023 as company thet specialises in development and production of robotic systems and UAVs for military. Their most famous product is the Sirko-S1 UGV – ground drone with advanced camera and laser orienting system, and with the feature of autonomous following of person.