Page 104 - RusRPTSept20

franchise stores
Total DOS selling space declined 1.2% y/y to 57,900 sqm
§ Cash loan portfolio grew by 23.2% y/y (-5.9% q/q)
Avg. loan size was up by 25.9% y/y to Rb23,217 (+4.9% q/q)
§ By the end of June 2020 most company’s stores which are primarily stand-alone ones were functioning in the normal mode, these are more than 800 stores in more than 300 towns and cities. Only 20 stores located in shopping malls which are still closed in some regions were not operating.
DP Eurasia, the master franchisee of Domino's Pizza, saw its pre-COVID (1 January-15 March) system sales growing 10% y/y, while they slid 31% y/y for the period 16 March-30 June, as the lockdown measures were introduced.
Russian mid-cap retailer O'Key Group reported 1H20 IFRS results with revenues up by 6.5% year on year, due to 7.3% growth in like-for-like sales and a 2.3% gain in selling space. Continuous cost improvements maintained Ebitda growth at 5.6% y/y and flat margin of 7.9%. Still, the company posted a net loss of RUB0.9bn ($12mn) in 1H20 due to a RUB1.1bn foreign currency loss and non-cash losses from non-current assets disposal. As reported by bne IntelliNews, at the beginning of 2019 O’Key unveiled a new strategy, but left investors unimpressed. By the end of 2019 O'Key had increased store openings and grown floor space, which helped it improve gross margins despite stronger market competition. The company posted strong results in pre-coronavirus (COVID-19) 1Q20. BCS Global Markets analysts on August 27 see the results as neutral and suggest focusing on 2020 guidance, including expected earnings margins and store openings plans.
9.2.6 Agriculture corporate news
Rusagro has released strong 2Q20 financial results: EBITDA surged 1.8x y/y and outperformed consensus by 10%. The oil and fats segment was a prime driver, accounting for 48% of total sales and 34% of EBITDA while maintaining impressive profitability (a 13% EBITDA margin in 2Q20) ahead of our mid- cycle view.
Net debt went down RUB10bn in 1H20 to RUB51.6bn and net debt/EBITDA of 2.1x, implying to us that there was robust deleveraging. The Board of Directors recommended a FY20 interim dividend of $0.19/GDR with a 2% yield and flat y/y payout. For the new farming year, we see the favourable supply-demand balance in vegetable oil being sustainable for Rusagro, while the sugar division is set to see a tangible rebound. The stock is flat YTD and now demands 2020- 21F EV/EBITDA of 6.6x, which we see as appealing.
Revenues were flat y/y (RUB38.3bn), with growth in the oil segment (+18% y/y), on increased capacity rented from SolPro (since 3Q19), being offset by the decline in the sugar division (-19% y/y), mainly on the drop in sales prices.
The key driver of the results was the oil & fats division, with 48% of revenues and 34% of EBITDA, while the company was able to sustain a record high margin (13% in 2Q20). The previous year's sunflower seed harvest was a record 15.4mnt, thus making procurement
104 RUSSIA Country Report September 2020 www.intellinews.com