Page 170 - RusRPTMay21

Among the key drivers, we note better shrinkages and promos alongside gradual improvements in commercial terms. These offset the slightly higher supply chain costs and investments into the loyalty programme. Tight cost control resulted in flat SG&As as a%age of sales and the EBITDA margin came 100bp y/y higher at 7.0% (both we and the consensus forecast 6.9%). Adjusted for FX, net incomes surged 1.8x y/y to RUB11bn while coming 5% ahead of us. Magnit continued to optimise inventory, lowered it 5% y/y, or RUB12bn to RUB211bn as of March. Net debt/EBITDA was 1.4x vs. 1.1x as of YE20 and 2.2x a year ago.
Magnit’s GDRs and locals have lost 17% and 8% YTD vs. the 13% correction in X5’s GDRs and 9% gain in the RTS. We see the pressure coming from uncertainties over the revenues and profitability that has now fully appeared in 1Q21 and are to bounce from mid-April across the sector. Magnit and X5 now demand 2021F EV/EBITDA of 5.7-5.9x and offer 10% and 8% dividend yields, respectively, which we see as appealing.
Detsky Mir reported strong 1Q21 IFRS results 29 April, disclosing a record high EBITDA margin and very strong earnings. However, the results seemed to be already priced in, and the stock came under pressure. We prefer to wait and see how the situation involving another potential buyout offer from Gulf Investments develops, as it could create profit-taking and/or buying opportunities.
Detsky Mir 1Q21 revenue in line with trading update reported earlier in April. The top line grew 15% y/y in 1Q21 thanks to the 1.8x y/y surge in online sales, which reached 27.6% of consolidated revenue during the quarter.
Gross margin up y/y. The retailer’s gross margin was up 30bps y/y to 27.6% in 1Q21. Price investments and increased transportation costs, along with costs related to online delivery, were more than offset by the higher shares of fashion and toys in the retailer’s sales mix. The recognition of supplier bonuses slipped a bit from December 2020.
EBITDA tops consensus by 3% (based on IAS 17). Cash SG&A (excl. D&A) decreased to 21% of sales in 1Q21 (-100bps y/y), which is slightly worse than our forecast due to higher-than-expected payroll. Most savings came from lower rent (-60bps), advertising (-20bps) and staff (-20bps) costs. All in all, this resulted in a 1Q21 EBITDA of RUB2.8bn (+47% y/y).
Net income matches consensus expectations. With net finance costs down 16% y/y, the FX loss being insignificant and an effective tax rate of c. 25%, net income came in at RUB1.3bn vs. a net loss of
170 RUSSIA Country Report May 2021 www.intellinews.com