Page 92 - RusRPTAug20

net result of the hypermarket business was flat revenues y/y. Meanwhile, discounters saw 51% revenue growth on the back of 34.7% LFL sales growth (on a 47% higher LFL ticket), and reached 17% of the group's total sales in 2Q20 (up from 13% in 1Q20). Notably, the company continued to develop its own delivery service, which showed 86% y/y growth of online sales in 2Q20. The company closed two hypermarkets during the quarter but acquired one from X5, which it has rebranded and reopened under the O'Key brand. O'Key ended the quarter with 177 stores and selling space of 589k m2.
Obuv Rossii​ (Shoes of Russia) has reported its set of data for June and sales have largely recovered from the crisis. ​LFL sales reached a comparable level y/y, while by the end of June, most of the company’s 800 locations (in 300 towns), were operational. Only 20 stores, located in regional shopping malls, remain closed. Traffic has recovered to 80% of pre-COVID levels, while 50% of retail proceeds come from non-footwear products, due to the stock expansion. These trends are a positive sign, as the 1Q20 trading update was weak, with top line growth slowing to 4% y/y, from 23% y/y in 4Q19 and 13% y/y in 1Q19. Most of the company's outlets were closed during April and the first half of May, creating the possibility for more negative consumer trends (due to missing the public holidays over that period), while sales started to recover gradually on the back of deferred demand, as non-food outlets began to reopen in late May - early June. However, we note that there is still uncertainty over future operations, as net working capital and leverage continue to be at elevated levels, at 122% of revenues and 3.3x net debt/EBITDA as of 2019, implying downside risks to Obuv Rossii’s overall liquidity.
9.2.6​ Agriculture corporate news
RusAgro​ has released decent 2Q20 operational results, with total revenues flat y/y at RUB38.7bn​. Vegetable oil accounted for 47% of total revenue and enjoyed a 10% y/y blended price increase that we link to the weaker local currency. The key drag was the sugar segment, as the high base for volumes (down 15% y/y) came along with oversupply and price pressure (11% y/y correction). New breeding complexes lifted the livestock output 40% y/y, while growing domestic supply was behind 7-12% y/y price declines across key products. For the new farming year (starts from July across commodities), we flag an 8% q/q sugar price recovery, which we link to a materially improving supply demand balance as the production declines 30% y/y to 5.6mnt on a lower planting area and adverse weather conditions for yields and content. Rusagro’s GDRs were up 13% in three months and are now at 2020-21F EV/EBITDA of 6.3x, which is appealing to us for an organically growing profile and rebounding sugar business. Our unchanged 12-month Target Price of $ 12 implies an ETR of 35%. Buy reiterated.
9.2.7​ TMT corporate news
Anti-monopoly watchdog approves consolidation of Yandex.Market​. Russia's Federal Anti-Monopoly Service (FAS) has given the green light to Yandex's acquisition of Sberbank's stake in their ecommerce joint venture, Yandex.Market, Interfax reports. The approval opens the way to complete the divorce between Yandex and Sberbank. To recap, Yandex and Sberbank agreed to split their JVs in June. Yandex is to pay RUB 42bn to Sberbank for its stake in Yandex.Market, while Sberbank will get Yandex's 25% in
92​ RUSSIA Country Report​ August 2020 ​ ​www.intellinews.com