Page 157 - RusRPTSept21

Conference call highlights. The company provided an update on its current operations and sees 3Q21 revenue growth at 10.5% on the 3.6% y/y LFL. Both metrics are comparable q/q and indicate to us that the operational stance is robust. In 1H21, the EBITDA margin reached 7.5% and the company now guides for annual profitability to be at least on the level of the previous year (7.3%). That implies modest upside risks to our model (a 7.0% EBITDA margin for 2021F). The growth in capex is to be less than that in revenues (matches our model; we see investments flat y/y at RUB90bn).
Valuation. X5’s GDRs have lost 9% YTD and now demand 2021F EV/EBITDA of 5.9x, with a 12-month dividend yield of 8%, one of the leading profiles in our consumer coverage. We see most of the unknowns for 2021 revenue growth and profitability as being already addressed in the financial results and management’s outlook. In our view, sentiment is to improve towards YE21F, while the rapid development of the e-grocery business and potential JVs represent sizable upside risks.
Fix Price has released its debut IFRS results after the IPO. They show 28% YoY revenue growth but a 60bp YoY slide in the EBITDA margin to 18.7% (14.1% on IAS 17), delivering on our and the consensus estimates.
Growth decelerated slightly in 2Q21 to 27% YoY, from 29% YoY in the previous quarter, as the base got tighter for May and June when the company saw competition partially closed a year ago. The gross margin corrected from the high base (31.2% vs. 32.7% a year ago) and returned to the 1H19 level, pressured by cost inflation, higher logistics costs and the growing share of food in the mix (29% in 1H21 vs. 26% a year ago). Fix Price slightly raised its roll-out guidance from 700 to 730 stores in 2021 to smooth the growing expansion costs. 1H21 dividends were 100% of net income for a 2% yield vs. our annual estimate for 4.4%. We cut our 2021F EBITDA 9% (to RUB 44.5bn on IFRS 16 and RUB 34.5bn on IAS 17) while our 12-month Target Price is 11% lower at USD 12.50. The stock has lost 17% in the last three months, overreacting to softer margins, in our view.
1H21 IFRS. In 2Q21, the revenue growth rate slowed slightly (27% YoY vs. 29% in 1Q21) as May and June saw a high comparison base (last year, non-food competition was partially closed). In 2Q21, LFL remained flat QoQ at 11.8% YoY, which we consider to be strong. The prime pressure came on the gross margin (down 150bp YoY to 31.2%)
157 RUSSIA Country Report September 2021 www.intellinews.com