Page 99 - RusRPTFeb21

Magnit​ no grounds to revise dividends or increase leverage after pick-up in openings, no quarterly dividend or buyback on the agenda​. During an online broadcast organised by VTB Capital Investments, Magnit’s IR Director Albert Avetikov mentioned some guidance for the company’s short-term performance. The company does not see grounds to reduce dividends or expand leverage as a result of the pick-up in openings from 4Q20. Improving leverage would imply a faster roll-out pace (both organically and inorganically) in 2021. The company does not plan to switch to quarterly dividends or have a buyback. Magnit has scheduled a guidance update for 4 February, alongside the publication of its 4Q20 financial results. Avetikov’s remarks are in line with our model, as we forecast 2020F capital expenditures declining 40% YoY to RUB 35bn and, together with tight working capital control, underpinning the RUB 16.5bn YoY decline in net debt to RUB 159bn as of YE20F as well as deleveraging to 1.5x net debt/ EBITDA as of YE20F (from 2.1x a year ago). For 2021F, we forecast 1,700 net openings (vs. 845 in 2020), resulting in an increase in selling space to 7% YoY, with capex up 64% YoY to RUB 57bn on the back of the higher roll-out and re-styling (500 stores this year). As EBITDA grows 5% YoY in our 2021F model to RUB 115bn, we factor sustainable leverage through the year. Dividends are the main attractive point for Magnit’s outlook, and supportive comments on their sustainability are favourable for its investment case. We factor annualised yields of 9-10%, the leading figure in our Russian retail coverage universe.
8.3.3 ​ ECM news
Russia’s largest online real estate classifieds resource Cian.ru may consider an initial public offering (IPO) in the US in 2022, ​Dmitry Kryukov, a partner of investment fund Elbrus Capital, a co-owner of Cian Group, told Bloomberg on Thursday. Cian may be valued at US $1bn soon, Kryukov said. Elbrus Capital and Goldman Sachs own Cian as well as online recruiting service HeadHunter.
Reuters reported on February 1 that​ ​Segezha​, Sistema’s largest non-public portfolio company, is preparing for an IPO in Moscow this spring​. According to sources quoted by Reuters, Segezha hopes to raise around $400-500mn at a valuation of more than $1bn (c. RUB76bn).The offering will be subject to market conditions and, according to Segezha, a final decision has yet to be made. No other details regarding the structure of the potential deal are available at this stage (including whether Sistema is going to partially monetize its 98% stake in Segezha or prioritize an equity injection).
As a reminder, Segezha is one of Russia’s largest forestry holdings, generating around RUB58bn in revenue and RUB14bn in EBITDA in 2019. The bulk of Segezha’s production is exported (over 70% of its sales are denominated in foreign currencies) to around 100 countries.
We think Segezha’s key competitive advantages are (1) its vertical integration and (2) its low cost of production vs. its global peers. Segezha is relatively self-sufficient when it comes to wood resources, with the share of Segezha’s
99 ​RUSSIA Country Report​ February 2021 ​ ​www.intellinews.com