WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, announced that Namsen Limited, directly controlled by Kernel’s founder and Chairman of the Board Andrii Verevskyi, has entered into a put option agreement granting a third party the right to sell 2,032,127 Kernel shares to Namsen Limited at the exercise price of PLN 7.5 per share. The option period will commence on the earlier of Jun. 17, 2024, or the date of official publication initiating a squeeze-out procedure in relation to Kernel Holding.

The Verkhovna Rada passed yesterday a bill on taxation of bank profits, imposing a one-off 50% tax on banks’ 2023 net income and increasing the regular profit tax rate for banks to 25% from 18% starting in 2024. According to Yaroslav Zheleznyak, deputy head of parliament’s finance and tax committee, the bill was agreed with the IMF, the Finance Ministry and the NBU and will be included into a revised memorandum with the IMF expected in mid-December.

The Ministry of Finance placed UAH 8.2bn ($227m) of hryvnia-denominated bonds and $200m of USD-denominated papers at a primary auction yesterday.

Ukrainian banks reported combined net profit of UAH 42bn ($1.1bn) in 3Q23, up 27% q-o-q, bringing 9M23 net income to UAH 110bn ($3.0bn), up from a mere UAH 7bn ($0.2bn) in 9M22. The share of non-performing loans dropped by 1.1pp q-o-q to 37.9%, remaining 11.3pp above the pre-war level. The sector’s end-3Q23 capital adequacy ratio stood at 25.0%, up 1.2pp q-o-q and 5.3pp YTD.

State rail monopoly Ukrainian Railways (RAILUA) has published key figures from its 2024 financial plan approved by the government. Total sales are projected at UAH 103.2bn ($2.8bn based on our 2024 average exchange rate forecast of UAH 37.3:USD) and cost inflation at 13% y-o-y, with the latter primarily reflecting planned salary increases and higher electricity tariffs. The company expects 2023 EBITDA at UAH 11.8bn ($316m) and projects a net loss of UAH 12.6bn ($338m), with stronger-than-forecasted cargo transportation volumes potentially compensating for the anticipated net loss. RAILUA has also budgeted 2024 CAPEX at UAH 38bn ($1.0bn), factoring in no state support.

According to the State Statistics Service, nominal monthly salaries paid to staff workers averaged UAH 15,436 ($422) in 1Q23 and UAH 17,176 ($470) in 2Q23, up 5.6% and 25% y-o-y respectively.

According to Deputy Infrastructure Minister Yurii Vaskov, Ukraine has exported around 4.4 Mt of commodities via its Black Sea corridor since opening it on Aug. 10, including 3.2 Mt of grains and 1.3 Mt of other commodities. Around 30 ships with combined deadweight of 1.2 Mt are currently being loaded at the Ukrainian ports and another 67 vessels, with total deadweight of 2.3 Mt, are on their way to Ukraine.

Russian forces made slight gains around Bakhmut and Avdiyivka in the Donetsk region last week. Despite suffering elevated losses for the sixth consecutive week, since the offensive on Avdiyivka began in early October, Russian forces are still maintaining a high tempo of assaults. The Ukrainian General Staff reported over 6,600 Russian casualties for the week, the highest weekly personnel loss for Russian forces since the start of the war (see chart below). Yet Russian territorial gains remain marginal, within 10 km2 on a 1,000 km long frontage on a weekly basis, indicating no potential beyond tactical-level advances at this stage.

Crude steel production in Ukraine totaled 5.2 Mt in 10M23, down 12% y-o-y, with finished and semi-finished steel output falling 13% y-o-y to 4.4 Mt and hot metal production down 16% to 4.9 Mt.

Hryvnia-denominated deposits at Ukrainian banks rose by 0.7% m-o-m in October, to UAH 1,449bn (+33% y-o-y), after growing by 1.5% in September, while F/X deposits increased by 2.3% m-o-m to $18.9bn (+13% y-o-y), reversing September’s 1.6% m-o-m drop. Gross UAH loans rose by 0.4% m-o-m in October, to UAH 715bn (still -3.3% y-o-y), while gross F/X loans went up by 1.2% m-o-m to $6.7bn (-14% y-o-y). Net UAH loans (gross loans less provisions), according to the latest reported data, increased by 2.9% m-o-m in September, to UAH 462bn (-9.3% y-o-y), on top of 1.9% growth in August. Net F/X loans were down 2.1% m-o-m (-15% y-o-y).

LSE-listed MHP, Ukraine’s largest poultry producer, held a conference call after publishing 3Q23 results. Commenting on its 2024 notes, the company said that out of the recently attracted $480m IFI funding some $270m remained available for refinancing purposes and $80m for CAPEX.

Metinvest reported crude steel production of 499 kt in 3Q23, down 7.8% q-o-q and up 95% y-o-y, with output of finished and semi-finished products down 9.3% q-o-q and up 29% y-o-y to 818 kt. Coking coal concentrate production fell by 19% q-o-q but was little-changed y-o-y at 1.3 Mt (+1.4% y-o-y). Coke production dropped by 9.4% q-o-q and rose by 2.0% y-o-y to 299 kt. Finally, Quarterly iron ore concentrate production jumped by 13% q-o-q and 207% y-o-y to 2.8 Mt in 3Q23.

LSE-listed MHP, Ukraine’s largest poultry producer, reported 3Q23 sales of $739m (-8.7% q-o-q, +1.6% y-o-y), EBITDA of $133m (+22% q-o-q, -1.9% y-o-y; incl. IFRS 16 effect) and net income of $55m (vs. +$18m in 2Q23 and -$181m in 3Q22). EBITDA before IFRS 16 stood at $111m, +10% q-o-q and -8.3% y‑o-y. Export sales totaled $411m or 56% of revenue (vs. 65% in 3Q22).

State-owned Oschadbank booked 3Q23 net profit of UAH 7.3bn ($201m), up 71% q-o-q, bringing 9M23 net income to UAH 14.2bn ($388m), up 423% y-o-y. Total assets in UAH terms increased by 5.8% q-o-q to UAH 315bn (+28% y-o-y), with net loans up 3.1% q-o-q (-0.3% y-o-y) and securities holdings up 10% q-o-q (+24% y-o-y).

The Ministry of Finance placed UAH 9.1bn ($251m) of hryvnia-denominated bonds at a primary auction yesterday.

According to the latest monthly survey conducted by the Ukrainian Institute for Economic Research (IER), the share of manufacturing enterprises operating at a capacity utilization of at least 75% rose by 3pp m-o-m to 59% in October, reversing three consecutive months of decline from a high of 62% in June. In line with the previous survey rounds, rising input costs remained the largest obstacle to business activity, mentioned by 48% of companies, slightly up from 46% in September. Security concerns eased last month, cited by 32% of firms, down from 40% in September and on a par with other impediments such as complicated logistics, weakening demand, power disruptions, and labor shortages. At the same time, the issue of supply chain disruptions was mentioned by only 21% of companies, down from 30% in September and 37% in October, while more companies became concerned about F/X regulations.