Page 149 - RusRPTDec21

price). We believe the retailer will pay out its FY21 dividends in two equal parts (as in FY20), indicating a total FY21 dividend yield of c. 9.4%. All in all, the decent dividends despite the acquisition of Dixy should support the retailer’s share price.
● Detsky Mir
Detsky Mir has released robust 3Q21 financials, which revealed a flattish EBITDA margin (13.3%) from an elevated base. The focus now switches to the recent lockdown in Russia (late October until yesterday), as the operations or assortments of 35% of the company's stores were directly limited. All stores are now operating normally, but QR code scanning at shopping malls is pressing traffic and sales. After the 3Q21 results, there are moderate upside risks to our model, although the uncertainties surrounding future lockdowns could mitigate those for the seasonally strong 4Q21. The 9mo21 dividend recommendation was downsized to a 60% payout from RAS net income (vs. 100% historical) and a 4% yield due to pandemic-related volatility, while the annual outlook is unchanged and the company keeps room to pay all net income for FY21 (11% yield in our model). Detsky shares are flat YTD (12-mo TP of RUB180; ETR of 42%, Buy). They trade at 2022F EV/EBITDA of 6.5x and P/E of 9x, which we view as appealing – especially as the pandemic situation and operations stabilizes.
Detsky Mir had previously released its operating results, which printed a decent 14% y/y revenue growth on 6% y/y consolidated LFL. Online turnover surged 44% y/y to RUB11.5bn and 26% of total.
The gross margin remained stable y/y and q/q at 31.7%, implying a decent level in our view. Among the support drivers, we noted a record high 53% share of private label and direct imports.
SG&As as a%age of sales added 40bp y/y to 11.2% with the key pressure from labour costs, which are currently a structural issue across the retail segment in Russia. Rent was flat at 7.2% of sales, close to the lowest level, as the company still benefits from favourable conditions on the commercial real estate market.
The EBITDA margin was upbeat 13.3%, flat y/y and from an elevated base. Adjusted FX net income jumped 10% y/y to RUB3.8bn.
In 9mo21, the company generated RUB2bn from operating activities and employed RUB3.7bn in investment activities. The leverage was generally flat YTD at 1.2x net debt/EBITDA.
The dividend recommendation was RUB3.8bn or RUB5.20 per share with the record day on 26 December. The payout was downsized to 60% of RAS net income (vs. 100% historically) due to the challenging operating conditions at present. Upon stabilisation, Detsky can return to a 100% payout for FY21 to imply 11% in our model.
The company’s financials for 9mo21 create some 10% upside risks to our annual estimates. We leave them intact to account for current
149 RUSSIA Country Report December 2021 www.intellinews.com