Page 91 - RusRPTAug20

further rerating depends on visibility on the terms of subsidised mortgages, household budgets and sustainability.
9.2.5​ Retail corporate news
X5 Retail Group​ has reported revenue growth of 13.2% y/y in 2Q20, matching management’s upbeat comments shared in June. The key strength was in the proximity format (up 16.1% y/y), which benefited the most during the lockdown, while the supermarket format (up 12.6% y/y) saw headwinds at stores located in shopping malls (54% of the total). For July, the proximity format’s LFL accelerated above 10% y/y, from 6% y/y in 2Q20, supported by out-of-home dining still coming out of lockdown, the ban on foreign travel and the warmer weather. The latest comments on profitability mean that we factor an EBITDA margin improvement of 10bp y/y to 8.4% in 2Q20F, while the comparable uplift in the net margin to 3.2% returns a 19% y/y surge in net income to RUB16bn. The impressive figures have been well flagged and we think that they, and the more aggressive dividends, have mostly been priced in, with the stock rerating 15% from early June and 70% from its lows in mid-March. We keep our 12-month Target Price at $37 with a Hold recommendation (13% ETR) while the 2020F EV/EBITDA of 5.9x and dividend yield of 6.7% are fair to us.2Q20 operating results. In June, X5’s CFO Svetlana Demyashkevich gave an interview. Her specific comments about revenue growth and profitability have mostly matched the released figures.
​X5 Retail Group​ has announced the launch of the Okolo (Nearby) express delivery platform​, aimed at unifying its Perekrestok.Bystro and Pyaterochka.Delivery express services, which are currently available from 439 stores in five cities. Customers will continue making purchases through both platforms, while deliveries will be now handled by Okolo couriers, in branded uniform. The operating model is to be based on partnerships with small local businesses offering express delivery across Russia, particularly in the food and ready-to-eat segments. At the first stage, orders will be delivered from X5 outlets only, with the service subsequently offered to other food market players.
Russian retailer​ ​Magnit​ reports 7.2% LFL sales growth and 7.9% EBITDA margin in 2Q 2020. ​The business reported 13.7% growth in total revenue, driven by a 14,000 sq.m increase in selling space and an encouraging 7.2% rise in LFL sales. This LFL increase, which was delivered across all Magnit’s regions, was underpinned by a 24.7% growth in average ticket size. The LFL sales growth trend has continued to accelerate into July, making it Magnit’s second strongest month of 2020 so far after March. During the period, Magnit launched an ambitious sustainability strategy with clear targets to achieve by 2025 across five focus areas, including environment, sustainable sourcing, employees, communities, health and wellbeing. Magnit operates a multi-format offer with 20,894 stores, including 14,581 convenience stores, 472 supermarkets and 5,841 drogerie stores in 3,710 cities and towns across Russia. Magnit is a value-for-money retailer, providing high-quality products at affordable prices and catering to all key everyday needs of Russian families.
O'Key published its 2Q20 trading update​. Net retail revenues increased 6.1% y/y to R41.9bn amid 7.4% LFL sales growth (on 40% ticket growth, which was partly offset by a 23.5% reduction in traffic). Though hypermarkets saw 3.7% LFL sales growth, this was offset by two hypermarket closures, so the
91​ RUSSIA Country Report​ August 2020 ​ ​www.intellinews.com