Page 131 - RusRPTOct21

Net asset value reached Rb387bn as of 30 June vs Rb308bn as of 31 December 2020 – implies a P/NAV of 0.7x vs 1.4x for PIK and 0.3x foroth LSR and Etalon, though NAV for PIK, LSR and Etalon is as of 31 December 2020 There was an interesting discussion about the company’s ecosystem, which currently contributes <5% of revenue,ut 2023 target assumes over 15% contribution to the top line without expectations about profitability. Ecosystem projects also mighte expanded for other developers in order to make them more sustainable and independent.
9.2.5 Retail corporate news
● Magnit
Magnit’s board of Directors has approved the change in Dixy’s acquisition price, which is now set at RUB97bn (vs. the RUB87.6bn announced previously).
The key highlights of the Dixy deal are as follows.
Magnit is to acquire 2,477 Dixy stores, which have a total selling space of 804,000sqm, or 10% of Magnit’s total as of 2Q21. The deal covers 2,438 convenience stores, with an average size of 300sqm, and 39 hypermarkets, with 2,000sqm, which are in line with the existing Magnit formats. The transaction also includes five DCs with a total space of 151,000sqm (9% of Magnit’s).
Dixy’s convenience stores are mostly located in the Moscow (50% of total) and the St Petersburg (18%) metropolitan areas, which have historically been tough for Magnit. We see the company’s decision as an aggressive move into these cities, and a material extension of scale, with upcomingenefits in procurement and efficiency.
174 stores were not included into the deal, with some stores having closed during the deal and some excluded in order to comply with the 25% market share limit in specific municipalities (148 outlets).
The company has to reduce its market share limit to 35% in 22 municipalities by 1 July 2022 According to Magnit, the acquisition is not going to limit its ability to pay dividends (a 10-11% 12-mo yield in our model) or to continue its organic roll-out (guidance left intact). Meanwhile, we believe that the potential benefits support the company’s longer term investment case As management had initially announced that the final deal price would be subject to accounts adjustments, this price change does not come as a major surprise. Magnit's net debt/EBITDA was 1.3x as of 1H21, comparable y/y andelow the 2.0x mandatory threshold which permits dividend
131 RUSSIA Country Report October 2021 www.intellinews.com