Page 86 - RusRPTJune18

enter the second quarter of 2018 with lower stocks. The weaker margins were offset by better cost management and SG&A as a% of the top line losing 190bp y/y to 23.5%. The prime support came from rent expenses (down 130bp y/y) due to the launch of improved rental terms since the beginning of the year. Thus, the EBITDA margin added 150bp y/y to 5.4% in the first quarter of 2018 , while EBITDA prior to LTI booking was RUB 1.44bn and outperformed the consensus estimates by 6.4%.
Russia’s children toy store giant Detsky Mir is mulling launching in Belarus , the company said on May 7. Detsky Mir is currently studying opening branches in Belarus in the leading stores and shopping malls as well as looking at M&A deals to enter via an acquisition of a local retail player, according to Kommersant. “Detsky Mir is already present in another of Russia’s neighbours, operating 22 stores in 12 cities in the Republic of Kazakhstan. Entering the Belarus market could support the company’s aggressive development pipeline: management guidance points to at least 70 new stores in 2018 and 250 new outlets in 2018-21F,” VTB Capital (VTBC) analysts said in a note.
Russian state-owned bank VTB confirmed the sale of its 16.62% stake in the Russian Burger King for RUB4.6bn ($74.4mn) the bank reported as part of its first quarter IFRS disclosure on May 16. The buyer of the stake was not named. VTB continues to hold a 19.98% stake in the company. The bank earlier announced its intention to sell part of the stake i n February, but did not disclose any details at the time.
X5 Retail Group ’s GDRs have been added to the MSCI Russian index as expected with a pro forma weight of 2.09%. As a result of the regular changes, the weight of VTB will be cut by 93 bps to 1.51% and that of Moscow Exchange (MOEX) will be reduced by 13 bps to 1.37%. The changes will become effective on 1 June, MSCI said in a statement. X5’s inclusion will give the stock a boost as it brings inflows from ETF’s. “The inclusion of X5 Retail was expected, but it is nonetheless positive for the GDRs. We estimate that the move will lead to c$170mn in inflows into the GDRs from ETF money only, which corresponds to 7 days of trading to cover,” BSC Global Markets said in a note.
Dixy Group may sell Megamart grocery stores. Magnit was offered the opportunity to buy the Megamart stores, but it declined the offer, according to Rambler News Service, citing unnamed market sources. Lenta might consider purchasing the stores, RNS reported, citing the same sources. 7% of consolidated revenue. In 2017, the Megamart division generated 7% of Dixy Group’s consolidated revenue. The division includes 26 Megamart branded compact hypermarkets and 15 Minimart branded supermarkets. All the stores are located in the Ural region. Potentially positive. If successfully divested, Dixy may focus on convenience stores, where it generates higher returns. Thus, we think investors should consider the move potentially positive.
9.2.6 Agriculture corporate news
Agama RT bought 49.99% in Russian Cod , controlled by a subsidiary of Russian Industrial Fish Company (RRPK) of Gleb Frank, the son-in-law of stoligarch and Kremlin insider Gennady Timchenko , Vedomosti daily said on May 8. RRPK is one of the largest fishing companies in Russia, holding the
86 RUSSIA Country Report June 2018 www.intellinews.com