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y/y to RUB 5.5bn while higher booked revenues notably improved allocation as a% of revenues (down 7pp to 14%). The EBITDA margin returned to its blended historical performance for 1H19 (at 14%) from the slightly negative performance a year ago. Revenues and EBITDA are in line with our estimate of 40-45% of our annual forecasts for 2019. We therefore reiterate the latter as 2H19 is to see a seasonally stronger performance.
LSR Group (LSR) has reported its 3Q19 trading update, that featured a 37% y/y decline and flat q/q volumes, from a strong base , along with a 15% y/y increase in prices. Prices grew organically 6-19% in 3Q19 across geographies, mainly benefitting from the sales mix of Moscow projects (27% of the total vs. 22% a year ago). The key driver was the ZILART project, which was priced at RUB223,000/sqm, growth of 7% y/y, with 19,350sqm sold in 3Q19 (up 23% y/y). This resulted in Moscow prices growing 19% y/y in 3Q19. YTD, 486,000sqm has been sold, which is 57% of our expectations (vs. 68% a year ago, creating downside risks to our estimates). The company continued to suffer from its fading market proposition and the completion of mature projects in St Petersburg. Sberbank CIB said in a note it held unchanged 12-month Target Price of $2.80 implies an ETR of 40%: Buy reiterated. During the quarter, LSR Group sold 164,000sqm, down 37% y/y from a strong base, and flat q/q. As of 9mo19, the company had sold 486,000sqm, which is 57% of our annual estimation, creating downside risks to our expectations. In 3Q19, the product mix benefited from an uplift in the share of Moscow projects, to 27% of the total, from 22% a year ago. The prime contribution to this came from the ZILART project (19,350sqm sales vs. 15,700sqm last year). The favourable mix underpinned a blended 15% y/y price increase, while the organic uplift was 6-19% in 3Q19 across key geographies in 3Q19
9.2.5 Retail corporate news
Russia's children's goods retailer Detsky Mir boosted its revenues by 19.3% year-on-year in 3Q19 to RUB36bn, due to accelerated growth in like-for-like sales in Russia and Kazakhstan to 10.7% y/y and organic expansion by 11.2% y/y. The top line growth accelerated as compared to solid results posted in 2Q19 . As reported by bne IntelliNews, previously in 1Q19 the retailer maintained stable revenue growth on a bad marke t, offering not just one of the highest sales growth rates in the retail sector, but also an estimated 11% dividend yield. "Solid results were driven by 9M19 sales growth of 17.3% y/y enables the company at least to realize our FY19 forecast of 16.8% or even slightly beat it," BCS Global Markets commented on October 16, while affirming the Buy recommendation on the name with target price of RUB140 per share. The key categories in terms of growth rates and volumes were clothing and footwear - share of these products rose 2.2pp (percentage points) to 34% y/y in total revenue in Russia. Online revenues continued accelerating to 63% y/y growth to Rb3.3bn. Total number of stores reached 780 stores (+17% y/y) with overall selling space of 794,000 square meters (+11.2% y/y), with 22 new branded stores openings in 3Q19, including 4 stores in Kazakhstan and Belarus. In 4Q19 at least 45 Detsky Mir stores will be opened.
M.Video published 3Q19 operating results where consolidated revenues declined by 1.9% y o-y to R87.8bn (excluding VAT), while LFL sales declined 9.9% after falling just 1.5% in 2Q19. This resulted from LFL declines at both Eldorado and M.Video stores, mainly on a drop in traffic from a high base. Total online sales grew 70% y/y to R26.9bn (excluding VAT, we estimate), or
121 RUSSIA Country Report November 2019 www.intellinews.o