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active in developing their sales via online channels because it allows them to scale up their business with the lowest investment and without the need to invest in creation of logistics infrastructure,” Wildberries said. The retailer said that about 400,000 businessmen sell their goods on Wildberries. “Since the beginning of 2021, their number has increased by 300,000 – a record number in the company’s 17-year history. About 90% of all sellers of the online floor are represeantives of SME and self-employed,” the statement read.
● Other
EPAM is a high quality long-term investment opportunity, which is underpinned by its accelerating growth and strong potential to generate more value through M&As.
In particular, we now think that normalised organic top line growth might be shifting from the earlier 20% plus to the mid-to-high twenties; however, EPAM appears to be passing through the peak of its recent organic growth acceleration, which might put a cap on any near-term strong expansion of multiples. We note that EPAM’s 2022F EV/EBITDA of 42.4x and non-GAAP P/E of 61.1x, although broadly in line with the closest peers, are already well into uncharted territory from the historical perspective. Therefore, given the recent rally in the stock, we remain cautious, as the latest positive developments are likely priced in. Our new 12-month Target Price of USD 750 implies an ETR of 5%: Hold reiterated.
Strong growth momentum. EPAM’s strong exposure to high growth themes has allowed it to outperform significantly the global IT market. Meanwhile, the ongoing strong acceleration of the market bodes well for EPAM’s business expansion, with its 3Q21 revenues rising at a historically record rate of 52% YoY. We see this rate as unsustainable in the longer term, as it was partly driven by the favourable base, FX effects and M&A contributions. Still, we hold that EPAM’s organic growth is shifting toward the mid-to-high-twenties, which was likely behind the stock’s recent re-rating, in our view. This outlook along with the most recent acquisitions underlie our updated forecasts for EPAM. In particular, we increased our 2021-25F revenue projections 2-14%.
M&A value opportunity. EPAM has stepped up its M&A activities this year. While all these deals are driven primarily by business considerations, we see a clear opportunity for value creation. In particular, our closer look at the most recent acquisition of Emakina Group reveals that the Group’s re-rating within EPAM due to potential synergies and better growth and profitability might add up to several percent to EPAM’s equity value. Thus, future M&A deals might imply strong additional upside, which is outside our model.
Reasons for caution. Apart from strong growth, EPAM’s recent re-rating has been driven by expanding multiples. Meanwhile, the current growth rates are likely to moderate in the medium term (although we expect them to remain high), barring any spikes in global inflation. Any further expansion of multiples could never be ruled out,
155 RUSSIA Country Report December 2021 www.intellinews.com