LSE-listed MHP, Ukraine’s largest poultry producer, announced the signing of a shareholder agreement with Desert Hills Veterinary Services Company Limited (DHV), a subsidiary of Saudi Arabian poultry producer Tanmiah Food Company. MHP and DHV will jointly invest more than SAR 200m ($53m) into farming operations with a capacity of more than 1 million parent stock expected to produce around 175 million hatching eggs annually, including a state-of-the-art hatchery and a poultry feed mill. DHV will hold a 55% stake and MHP own the remaining 45% in the venture.

Ukrainian forces continued their offensive along the southern front and around Bakhmut in the east throughout last week, maintaining the initiative in these sectors. In one of the most active areas, north of Tokmak in the Zaporizhya region, Ukrainian assault formations deepened and expanded their salient along the main Russian defensive line, broadening it to around 10 km, despite the Russian command bringing in reinforcements. Ukrainian troops also made appreciable gains south of Bakhmut and near Avdiyivka, on the outskirts of the city of Donetsk, on the eastern front. While the Bakhmut and Donetsk sectors are not seen as being a priority direction for the ongoing Ukrainian offensive, the continued Ukrainian pressure there keeps large Russian forces fixed and being depleted, especially as Bakhmut retains much symbolic significance for Russia’s war narrative, being its only territorial achievement over the past year. At the same time, Ukrainian forces remained on the defensive up north along the Kharkiv-Luhansk region border, with the front lines there barely moving.

Ukraine exported 3.1 Mt of grain and oilseed crops in August, the second month of the marketing year (MY) 2023/24 (July 2023 – June 2024), up 18% m-o-m but down 6% y‑o‑y. Grain exports totaled 2.3 Mt (+2% both m-o-m and y-o-y) and oilseed exports 0.7 Mt (+129% m-o-m, -24% y-o-y).

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, said in its new operational update that Russian drone attacks against Ukraine’s Danube river ports during Sep. 2-3 damaged critical assets used for vegetable oil exports and hit several grain storage sites. The full extent of the damage was being assessed, Kernel said. Kernel also reported August grain exports of 92 kt (up from 10 kt in July), sunflower meal shipments of 67 kt, and sunflower oil sales of 98 kt.

State rail monopoly Ukrainian Railways (RAILUA) reported freight transportation of 12.3 Mt in August, up 0.5% m-o-m and 14% y-o-y.

NBU gross foreign reserves declined by 3.2% ($1.3bn) m-o-m in August, to $40.4bn, still up 42% or $12bn YTD. The end-August tally was equivalent to 5.4 months of prospective goods and services imports, according to a central bank estimate.

The Verkhovna Rada confirmed President Volodymyr Zelensky’s nomination of Rustem Umerov, former head of the State Property Fund, as the new defense minister. Umerov, 41, a Crimean Tatar, participated in initial peace talks with Russia and later negotiations on the Black Sea grain deal in the early phase of the war in March-July 2022. Known for his diplomatic skills and high-level connections in the Muslim world, Umerov was also closely involved in multiple behind-the-scenes negotiations on prisoner exchanges with Russia, including with Saudi Arabia’s mediation last year.

Vodafone Ukraine (VFU), Ukraine’s second largest mobile operator, held a conference call to discuss its 2Q/1H23 results. VFU confirmed its intention to continue servicing its debt, including the next coupon payment of $12m due on Feb. 11, 2024. The company said it continued to seek the central bank’s authorization to use its local UAH liquidity to settle the coupon but also had backup options in place, including paying from its offshore bank account. VFU also said it was exploring different ways to address the maturity of its 2025 notes ($400m due on Feb. 11, 2025) in case the existing limitations on F/X payments remained in place by that time. Potential options include refinancing, changing the terms of the bonds, or attracting partial parent support. VFU reported its current cash balance at $200m, equally split between UAH and hard currency. The split between onshore and offshore accounts was not disclosed.

The Verkhovna Rada passed yesterday, at final reading, a bill on reinstating the obligation for public officials to file annual electronic asset declarations and have them examined by state anticorruption bodies. The bill retroactively applies to the period since the start of the Russian invasion, when declarations were suspended with the imposition of martial law, requiring that officials report their assets for both 2021 and 2022 during 90 days after the bill takes effect. Exceptions were made for officials who serve in the defense and security forces or remain in occupied territories. The final version of the bill included a controversial amendment on leaving the declarations register closed for public access for a year (or less if martial law is terminated earlier). Lawmakers explained this amendment by security reasons but opposition deputies and anticorruption NGOs heavily criticized it as undermining Ukraine’s anticorruption commitments to its Western partners.

The National Bank’s index of business expectations, a PMI-type gauge, inched up by 0.5 points m-o-m in August, to 49.3 on a 0-100 scale, remaining slightly below the neutral level of 50 for the second consecutive month.

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 subscribed for 212,634,916 out of 216,000,000 new shares being issued.

The central budget provisionally ran a deficit (net of grants) of UAH 131bn or $3.5bn in August, shrinking from $4.2bn in July and $4.9bn in June.

News: Fitch Ratings affirmed its long-term issuer rating on Ukrainian Railways (RAILUA) at CC and upgraded its standalone credit profile to CCC- from CC after the company reported better-than-expected 1H23 results and updated its 2023 forecast. According to Fitch, Ukrainian Railways saw its 2022 freight revenue slide by 52% y-o-y and passenger transportation by about a third. However, the company increased its 2023 revenue forecast by 16% versus its initial plan, reflecting better-than-expected freight tariffs and passenger turnover. At the same time, RAILUA expects operating costs to be 17% lower than in the initial plan for 2023, potentially resulting in a marginal net profit in 2023. According to Fitch, that improves RAILUA’s financial position and standalone credit profile, easing pressure on liquidity, but a default is still a possibility in the medium term.

WSE-listed Kernel Holding, Ukraine’s largest sunflower oil producer and grain exporter, announced the results of its share offering. Today, the company is to issue 216,000,000 new shares to several qualified investors at a price of $0.2777 (PLN 1.15) per share, thus raising a gross amount of $60m, in line with its pre-announced target. The new shares will be kept in registered form and not be admitted to trading on any stock exchange.

President Volodymyr Zelensky announced yesterday his decision to replace Defense Minister Oleksiy Reznikov, following a series of media investigations about alleged corruption within the Defense Ministry. Zelensky said he would nominate Rustem Umerov, currently head of the State Property Fund, to succeed Reznikov, adding that the Defense Ministry was in need of “new approaches and other formats of interaction with both the military and society at large.” Reznikov formally tendered his resignation this morning, and parliament is expected to confirm Umerov as the new defense minister this week.

The Ukrainian offensive on the southern front continued to progress, slowly but steadily, last week. Ukrainian forces expanded their salient north of Tokmak in the Zaporizhya region, with the fighting ongoing along a c. 10 km stretch of Russia’s main defensive line. Control of this area, some 20 km north of Tokmak, is seen as crucial for further progress of the Ukrainian offensive, as the local terrain includes the last dominant heights on the way south. According to unconfirmed accounts, Ukrainian forces took control of the remaining high ground over the weekend.