Page 147 - RusRPTDec21

These numbers create moderate upside risks to our model: a 10% y/y top-line increase, 1,250 net openings, EBITDA margin of 6.7% and dividend yield of 8%. Another focus area was the development of the discounter format (Chizhik). It is to have 300 openings in 2022 and 2,700 more in the next two years, which is to have an 80bp negative impact on the EBITDA margin. The breakeven of Chizhik is to be reached by 2024F. The digital businesses are to generate RUB200bn of GMV by 2024, with 40mn of monthly active users by then. X5 is still considering considers various strategic options for online development, but has not yet provided tangible comments.
Among the new initiatives, the company mentioned X5 Bank, with an aim to offer banking services to clients (no details specified) and optimise acquiring costs.
Furthermore, a subscription service is to be launched next year, which is currently in test mode. In the longer-term (2021-24), X5 targets 12% revenue CAGR, 7,000 store openings and an EBITDA margin of more than 7% by 2024 (8% for mature businesses). Such expectations create upside risks to our estimates in the longerterm, but largely depend on the success of the discounters rollout and e-commerce channel development. X5’s GDRs are up 12% over the last three months vs. the 35% surge for Magnit, an underperformance we view as unfounded, while the 2022F EV/EBITDA of 5.8x and 12-mo dividend yield of 8% are appealing to us.
The key messages of the CMD are as follows: The company aims for 15% market share by 2023F vs. the current 13% The total impact from digitalisation projects will be RUB20bn gain on EBITDA level 2022 guidance is 1,700-2,000 gross openings, >10% y/y revenue growth, dividends of no less than in 2021 and an EBITDA margin, comparable to 2020-21.
The company’s 2021-24 targets are as follows: 12% revenue CAGR; less than 1.8x net debt/EBITDA; 2024 EBITDA margin of more than 7% (8% for mature businesses); full dividend coverage by net income by 2024 7,000 store openings are expected in next three years, including 3,000 Chizhik stores. The negative impact of discounters was estimated at 80bp on the EBITDA margin. After 2024, the format is expected to breakeven.
X5 bank is to be launched soon, while the introduction of subscription services is to come in the next year The GMV of digital businesses is to reach RUB200bn by 2024F.
X5 Retail Group, the leading grocery retailer in Russia, announces the pilot launch of financial services under the X5 Bank brand. The X5 Bank project will be carried out by an independent company whose founders include X5 Group and Alfa Bank. In the first stage, X5 will release digital debit cards that combine the functionality of its loyalty cards for the Pyaterochka and Perekrestok retail chains with banking services such as payments, money transfers and rouble-denominated cash back, among others. To receive a card, users can update their current loyalty card to a
147 RUSSIA Country Report December 2021 www.intellinews.com