Page 123 - RusRPTMay20

guidance was revoked. Magnit decided to review its store opening and redesign program with a greater focus on returns. It will provide regular updates on a quarterly basis with the revised store opening guidance. Previously, Magnit planned to open only 1300 new stores (net) vs 2377 in 2019. CapEx was expected to grow to RUB60-65bn vs RUB58.6bn in 2019.
O’Key​ Group reported 1Q20 Trading Update. For hypermarkets, results were driven by higher demand ​before the lockdown and operational changes, including strengthened assortment, private label products and introduction of a new loyalty program; for proximity stores – good work with value proposition to customers, while delivering competitive prices for essential goods. The Group‘s net retail revenue increased 7.6% y/y vs +1.1% y/y in 4Q19 Net retail sales generated by O'KEY hypermarkets rose 3.7% y/y, mainly driven by +3.6% in the average basket Net retail revenue generated by DA! was up 42.6% y/y, supported by growth in traffic (+29.9% y/y) and average ticket (+9.7% y/y) The Group’s LFL sales were up 7.2% y/y vs -0.3% y/y in 4Q19, driven by increased traffic (+3.7% y/y) and average ticket (+3.4% y/y) LFL net retail sales generated by O'KEY hypermarkets increased by 4.9% y/y, driven by +0.9% in LFL traffic and +4% y/y in the LFL average ticket LFL net retail sales generated by DA! rose 11.4% y/y, driven by +15.5% y/y in LFL traffic and +10.1% y/y in LFL average ticket. Total selling space rose 2% y/y to 598,308 sqm – unchanged q/q
9.2.6​ Agriculture corporate news
Rusagro’s 1Q20 operating results show headline revenues up 16% YoY to RUB 33.6bn​, implying a decent pace ahead of our model and offsetting the soft pricing environment with a volume expansion. The YoY price declines ranged from the 32% correction in sugar (which is still suffering from oversupply) to the flattish results in oil & fats (nowadays the flagship business, accounting for 48% of quarterly revenues). Last year’s volumes provided a favourable comparison base, while there was an additional boost from the consolidation of new capacities in the vegetable oil division as well as greenfield additions in pork. We think the company benefitted from increasing demand for consumer goods in March via the branded products in sugar and oil refining, but with the current cooling that is to have a limited impact on the annual results. The sugar division is the key drag on Rusagro’s operations at present and we do not see a quick turnaround, as the Ministry of Agriculture does not forecast a significant decline in the beet planting area for the next season (September-August), and that is insufficient, in our view, to improve the supply-demand balance in the segment. Rusagro is down 16% YTD and now demands 2020F EV/EBITDA of 6.1x while for a rerating we would need to see improving conditions for sugar refining, completion the of greenfield projects, and deleveraging.
9.2.7​ TMT corporate news
Russian internet major Mai.ru reported revenues growth of 14% year-on-year and 13% quarter-on-quarter decline to RUB22.3bn in 1Q20 under IFRS, in line with consensus expectations. Ebitda went down by 42% q/q and net income was down 61% q/q. BCS Global Markets commented on April 22 that a revenue dip in 1Q20 is attributed to traditionally slow quarter with lack of big game launches (game segment revenue +13% vs 23%+ in 2019), as well as due to impact of anti-virus measures, which contributed to
123​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com