Page 150 - RusRPTDec21

operating uncertainties and await more details on the final dividend payout. Upon stabilisation, valuation multiples of 2022F EV/EBITDA of 6.5x and P/E of 9x would be appealing to us.
● Other
Fix Price has released its 3Q21 IFRS results. Revenue growth tangibly decelerated, to 18% y/y vs. 27% y/y in 2Q21. The key reason was the high comparison base – 40% y/y in 3Q20, on resumption of activities and restoration of customer traffic after the lockdown.
The gross margin reached 31.8% and was almost comparable y/y, due to the higher share of RUB249 and RUB299 price pointers in sales, having reached 8% of retail revenue in September 2021. In the near future, two more pointers, RUB59 and RUB79, are to be introduced, while the two cheapest pointers, RUB50 and RUB70, will be gradually squeezed out. The company continued to have a strict cost control, with SG&A as a%age of revenue staying flat y/y at 13.3%. Thus, the EBITDA margin of 19% (IFRS 16) remained broadly unchanged. As of 9m21, revenue growth stood at 24% y/y, with the EBITDA margin at 18.8%, while YTD, store openings were 495, with the latter being 68% of the annual guidance. We see minor downside risks to our 2021F top-line estimates (+27% y/y).
Trading update. During the quarter, the company’s top-line pace decelerated to 18% y/y vs. 27% y/y in 2Q21. LFL showed a more profound decline, to 4.4% y/y vs.
20.6% y/y. Both trends happened because of the strong comparison base of the previous year, as traffic inflow has restored post lockdown and customers increased the intensity of their shopping activities. YTD store openings stood at 495, representing 68% of the annual guidance. The share of food in the mix reached 27.9% in 3Q21, down 100bp q/q, driven by higher non-food sales during the back-toschool season.
Financials overview. The gross margin correction in 3Q21 was insignificant (-30bp, to 31.8%), as the share of higher price pointers (RUB249 and RUB299) increased to 8% of retail sales. Fix Price plans to introduce two more price pointers, of RUB59 and RUB79, replacing the existing cheapest price pointers of RUB50 and RUB70. With cost discipline remaining strict in 3Q21, the SG&A have stayed flat y/y at 13.3%. As a result, the company’s EBITDA margin also remained broadly unchanged, at a strong 19% based on IFRS 16 (14.5% based on IAS 17). Net income surged 85% y/y to RUB5.1bn, on the back of lower tax expenses (-12.5% y/y) and almost no FX loss vs. RUB1bn recorded a year ago. The effective tax rate was 32% during the period vs. 49% in 3Q20, as in the previous year the company had to pay taxes on the intragroup dividends. In 9mo21, the company delivered NOCF of RUB18bn and employed RUB5.2bn in capex, putting leverage at 0.5x net debt/EBITDA (IAS 17).
150 RUSSIA Country Report December 2021 www.intellinews.com