Page 138 - RusRPTMar21

14.6% effective tax rate resulted in net income coming in 8% above consensus.
More importantly, the company indicated that RAS-based net income reached c. RUB4.5bn in 4Q20, implying DPS of c. RUB6/share, which is well above our forecast of RUB4.5/share. We believe that management could make encouraging comments on YtD trading during today’s conference call, which could be positive for the stock and point to room for top-line upgrades for 2021. We continue to see value in the stock at its current levels and reiterate our BUY on the name.
Detsky Mir’s 4Q20 revenue was in line with the trading update reported earlier in January. The top line rose 14.3% y/y in 4Q20 due to the 2.2x y/y surge in online sales, which reached 28.6% of consolidated revenue during the period.
Gross margin brought a negative surprise... The retailer showed that its gross margin had contracted 300bps y/y to 31.1% in 4Q20. This was mainly due to the different calendarization of promo activity, which moved supplier bonuses to January 2021. The company also noted an increased share of direct online deliveries, which prompted higher transportation costs.
...resulting in a 4% miss on 4Q20 EBITDA (based on IAS 17). Cash SG&A (excl. D&A) decreased to 18% of sales in 4Q20, down 270bps y/y and better than our forecast. Most savings came from lower rent (120bps) and advertising (70bps). Nonetheless, this still could not offset the negative impact of the gross margin contraction, resulting in a 4Q20 EBITDA of RUB5.6bn, 4% below our and consensus expectations.
Net income outperformed forecasts on the back of the FX gain of RUB466mn, the 21% y/y decline in interest expenses and the 14.6% effective tax rate (vs. 24.2% a year ago). As a result, the company booked net income of RUB4.3bn in 4Q20, which is 8% above consensus and 23% higher than our forecast.
Cash flow and debt. The company reported OpCF of RUB10.4bn in 2020 (-11% y/y), dragged down by the build-up in working capital. Capex fell 32% y/y to RUB2.4bn over the same period amid fewer store openings. ND/EBITDA fell to 1.1x as of YE20 vs. 1.2x as of 9M20 and 1.2x a year ago.
4Q20 dividend could reach c. RUB6/share. The company expects its RAS-based net income to reach RUB4.5bn in 4Q20, and management will recommend fully paying out this amount in dividends. This implies DPS of c. RUB6.09/share for a c. 4.2% yield on current prices, which
138 RUSSIA Country Report March 2021 www.intellinews.com