Page 140 - RusRPTNov20

Obuv Rossii​ (Shoes of Russia) has released a 3Q20 trading update that saw a revenue rebound from the 55% y/y drop the previous quarter ​to a 17% y/y decline on resuming economic activity and the reopening of stores. The core business in retailing and wholesale came under greater pressure (down 26% y/y and 18% y/y, respectively), while cash loan revenues added 11% y/y to represent 20% of the total. In the retail divisions, we noted rapid development of the Prodayom marketplace platform, which accounted for 28% of retail sales in the quarter. We note that Obuv Rossii’s results underperformed those of CCC, with the latter growing 8% y/y in 3Q20. For Obuv Rossii, our model assumes 12% y/y and 19% y/y revenue drops in 4Q20 and FY20, and we leave intact our forecasts, anticipating more details on the near-term limitations. Obuv Rossii’ shares have declined 22% in the last three months. We upgrade the stock to Buy from Hold (12-month Target Price of RUB38). The stock trades at 5.6x 2021F EV/EBITDA and 4.1x P/E, which look pressured to us, even accounting for the challenging operational conditions. 3Q20 operational results. The release saw a tangible rebound in revenue dynamics, from the 55% YoY decline the previous quarter to a 17% YoY drop in 3Q20. For September, the company revealed a 10% YoY correction, mentioning that it had been able to resume most of its economic activity during the month and that all its stores had been opened. Still, the core retail business was most vulnerable, with a 26% YoY correction as it undergoes a transformation to the marketplace model and introduction of an assortment outside the apparel and footwear categories. The company is optimising the store base and had 60 net closures in 9mo20, while its own network selling space corrected 7% from YE19. Net debt has expanded 9% over the last nine months, to RUB 12.8bn as of September, moderately ahead of our model, which factors in RUB 11.7bn by YE20, with 5.5x net debt/ EBITDA.
9.2.6​ Agriculture corporate news
Rusagro​ 3Q20 trading update: Favourable pricing environment suggests strong margins​. Advantageous price dynamics should support Rusagro’s profitability in 3Q20. We continue to like the stock, and we view the release of the company’s 3Q20 financials as a positive catalyst that could reveal upside in our and consensus FY20 estimates.
Rusagro published its 3Q20 sales results, reporting a 10% y/y revenue growth. The strong performance of the company’s other three main business segments offset the 25% y/y drop in sugar sales volumes. We believe that strong price dynamics should support 3Q20 margins.
· Sugar​. Sales volumes fell 25% y/y in 3Q20 to 205kt, while production decreased 14% y/y last quarter. This is generally in line with expectations of lower sugar beet yields and the decrease in area under sugar beet that are expected to lead to lower sugar output y/y in Russia this year. The lower production outlook has
140 ​RUSSIA Country Report​ November 2020 www.intellinews.com