Page 156 - RusRPTJun21

Ozon a leading Russian e-commerce platform, announces that it has registered an operating company in the Republic of Belarus called Ozon Rocket Bel LLC. The new structure will enable Ozon to scale up business and expand its logistics infrastructure in the country. In 2021, Ozon plans to open a distribution centre in Belarus to speed up order processing and delivery. In addition, the Company is planning an exponential increase in the number of Ozon pickup points. To accomplish these goals, the Ozon team in Belarus has added Maxim Ganush and Sergei Chileko, managers with thorough knowledge of Belarusian e-commerce who previously worked for Lamoda and Europost. Ozon already sells goods to customers in Belarus but has relied on local delivery services in place of its own infrastructure. With the appearance of its own logistics centre and the development of its last-mile service, the Company will reduce the time needed to deliver goods to Belarus.
EPAM’s consensus-beating 1Q21 results and higher FY21 guidance support our view of strong demand trends.
We have incorporated the impact of the recent acquisitions and the latest outlook provided by management into our model, resulting in increased growth projections. At the same time, we are taking a more conservative stance on margins, as the business expansion and competition for talent, along with a return of certain expenses in the post-pandemic environment, could well cap profitability gains. We have also recalibrated our WACC assumptions, which reduced our discount rate 1pp to 8.1%. These changes lead to a 21% increase of our 12-mo TP to $515 (ETR of 12%). We continue to see a strong long-term fundamental story behind EPAM, but suggest looking for a better entry point. Hold reiterated.
Strong 1Q21. EPAM’s 1Q21 revenues rose 20% y/y to $781mn and came in 2% above our forecast and consensus. Non-GAAP operating profit of $137mn (+30% y/y) exceeded our and consensus expectations by 5% and 8%, respectively. Diluted non-GAAP EPS was up 27% y/y to $1.81, 6-8% above consensus and us and EPAM’s guidance ($1.62-1.70).
Higher guidance. EPAM increased its y/y growth guidance for FY21 revenues from 23% to 29% due to strong and increasing demand (with 2pp contributed by recent M&A deals). The company maintained its guidance for the non-GAAP operating margin at 16.5-17.5% and increased its FY21 diluted non-GAAP EPS guidance from $7.20-7.41 to $7.54-7.76.
Forecast revisions. Our projections were above EPAM’s initial FY21 guidance. Therefore, our revenue revisions are more moderate and mostly reflect the impact of the acquisitions. We increased our 2021-25F revenue forecasts 3-4%. We also trimmed our projections for non-GAAP operating margin after 2021 to 17.2-17.3%, as we conservatively assume that additional investments in talent and expansion will be required to support higher top line growth. Nevertheless, our projections for 2021F revenue growth (+30% y/y) and non-GAAP EPS ($7.83) are still higher than EPAM’s guidance.
156 RUSSIA Country Report June 2021 www.intellinews.com