Page 85 - RusRPTJune18

9.2.5 Retail corporate news
Russian retailer Magnit announced on May 8 its board will be chaired by Charlie Ryan , who has joined the company as a director in April 2018. Magnit is staging a comeback on the highly competitive Russian retail market preparing to win back the leadership back from X5 Group that posted disappointing results in the first quarter of 2018 and lost a highly regarded CEO of its anchor format Pyaterochka.
Russia’s second-largest bank state-controlled VTB sold 12.05mn shares, or 11.82%, of major retailer M agnit to the Marathon Group of Alexandre Vinokurov for a reported $1bn, the bank said on May 24. After the deal to Marathon VTB’s stake in Magnit declined to 17.28%. As of May 23 the market value of the stake re-sold by VTB stood at RUB62.5bn ($1.02bn), but the bank did not reveal the actual price paid in the deal.
The market was caught by surprise after the former CEO of X5’s Pyaterochka supermarket chain Olga Naumova was appointed as the Executive Director of Magnit , according to reports in Kommersant and Vedomosti on May 16. Magnit has been suffering from management problems ever since its founder Sergei Galitsky sold his stake to VTB in February. Several senior managers left the company saying it had lost its way and joined rival firms. However, now the company looks like it is starting to recover from the shock. The market capitalisation of Magnit in London recovered from a recent beating and again narrowly overtook that of rival X5 Retail Group to regain its title as most valuable retailer in Russia in February, but analysts say it still has a lot to do. Magnit is going to prepare a new strategy for the company’s development. Naumova will be engaged in operational management, store development, marketing, pricing, and logistics, reports BSC Global Markets.
Russian retailer O'key could hold an IPO of its discounter format "Yes!"
(Da!), CEO of the group Miodrag Borojevic told Reuters on May 14, adding that the offering might take place once the discounters become profitable in the 12-18 months horizon. Launched in September 2016 currently Yes! counts 67 stores in the Moscow region and several adjacent regions. Either an IPO or a large private investor will provide the funding to needed to boost the expansion of the chain.
Detsky Mir released its the first quarter of 2018 IFRS results, featuring robust profitability trends . Amid the (previously reported) deceleration in revenue growth to 14% y/y, the EBITDA margin improved 150bp y/y to 5.4% and allowed total generation to outperform the consensus estimates by 6%. For 2018, Bankers factor in a flat y/y EBITDA margin of 10.0% and do not see any reason to revise it due to the seasonally low nature of the first quarter. The stock demands 2018F EV/EBITDA of 6.7x, which we consider to be appealing in light of the rapid revenue growth (up 15% y/y in 2018F) and impressive dividend profile (a 12-month dividend yield of 8.5%). VTBC reiterates a Buy recommendation on the back of our unchanged 12-month Target Price of RUB 130 and 50% ETR. Robust profitability. The already released the first quarter of 2018 trading data featured revenue growth slowing to 14% y/y, from 20% y/y in the previous quarter, on the strong comparison base. The gross margin declined 110bp y/y to 29.6%, reflecting Detsky’s strategy of stronger promos on apparel and footwear in the winter collection, as well as on toys, in order to
85 RUSSIA Country Report June 2018 www.intellinews.com