Page 9 - bne_newspaper_July_05_2019

bne Invest
July 5, 2019 www.intellinews.com I Page 9
Moscow Credit Bank buys 20% in 36.6 pharmacy chain
Russia's Credit Bank of Moscow (CBOM) acquired a 19.65% stake in 36.6 pharmacy chain through the re- structuring of its debt, the bank reported on June 28.
36.6 shares rallied by 140% in the second quarter of 2019, mostly in June, but the analysts surveyed by Vedomosti daily believed that the growth was not sustainable.
The chain is one of the largest in Russia, with RUB12.5bn ($198mn) of revenues in 1Q19 being the fourth largest in the country. It operates over 1,300 pharmacies in under brands 36.6, Gorzdrav, A5, and others.
Most recently another anchor investor bought into the company, with Altus Capital investment fund acquiring a 29.7% stake in an SPO.
36.6 has been consolidating its share of the market for the last couple of years. In June 2015, it took over pharmacy chain A.V.E. Group. In August 2016, 36.6 acquired the Russian division of major pharmaceutical distributor Walgreens Boots Alliance RUB2.4bn ($37mn). 36.6 and A5 announced their merger in January 2016.
Russia's X5 Group rallied to Sell in June, BCS Global Markets believes
The shares of Russia's largest retailer X5 Group rallied over 22% in June on strong first-quarter results, cementing its role as the innovation leader in the industry, but the rally has limited the 12-month upside and brought estimated Excess Return to minus 9%, BCS Global Markets argues on July 1.
Most recently Sberbank CIB also argued that X5 is becoming an uncontested industry leader with the potential of becoming the leading online food retailer as well. But BCS GM analysts recommend investors lock in profits now and downgraded X5 shares to Sell, with the target price of $37 per depository receipt remaining unchanged.
BCS believes that retail market has limited upside in the current macro environment characterised by declining real disposable incomes and esca- lating consumer debt. "Economic conditions will continue to be challenging for retailers, putting pressure on margins," the analysts argue.
X5 Retail has already become the most expensive of its Russian peers in food retail, trading at 2019 estimated Price / Earnings of 17.3x and 2019 esti- mated Enterprise Value / Ebitda of 5.5x, suggest- ing a 9% premium on P/E to the Russian peers median, BCS GM estimates.
Read the full story here