Page 104 - RUSRptApr17

Valuations : X5 is the sector’s most undervalued story, trading at 6.5x 2016E EV/EBITDA, implying a 7% discount to its historical average and a 29% discount to Magnit. Lenta’s current valuation is also unjustified: it trades at 6.9x 2017E EV/EBITDA, implying a 24% discount to its historical average and a 24% discount to Magnit. The latter trades at 9.1x 2017E EV/EBITDA, implying a 12% discount to its historical average, but considering its sales growth deceleration, we still see multiple derating scope.
Key valuation multiples of retailers
COMPANY
MARKET CAP, $ MLN
EV, $ MLN
EV/EBITDA
P/E
EV/REVENUE
2016
2017E
2018E
2016
2017E
2018E
2016
2017E
2018E
Magnit
18,260
20,058
11.1x
9.5x
8.3x
22.4x
16.2x
13.7x
1.2x
1.0x
0.8x
X5
8,297
10,689
8.2x
6.7x
5.5x
18.1x
13.4x
10.2x
0.6x
0.5x
0.4x
Lenta
3,275
4,731
10.0x
7.0x
5.8x
19.5x
12.8x
10.1x
1.0x
0.7x
0.6x
Dixy
540
1,010
7.0x
4.1x
3.3x
neg.
34.8x
9.8x
0.2x
0.2x
0.2x
O'Key
514
985
6.2x
5.3x
4.6x
27.8x
14.7x
10.5x
0.3x
0.3x
0.3x
Source: Gazprombank
Overview of retailer valuations depending on methodology used, $ per GDR
CURRENCY
DCF
EV/EBI TDA
P/E
WEIGHTED TARGET PRICE
CURRENT PRICE
UPSIDE POTENTIAL
RECOMMEND
Magnit (GDR)
USD
36.4
31.4
39.1
35.8
38.6
-7%
UNDERWEIGHT
Magnit (shares)*
RUB
9,436
8,141
10,145
9,290
9,700
-4%
UNDERWEIGHT
X5 (GDR)
USD
33.5
37
36.8
35.2
30.6
15%
OVERWEIGHT
Lenta (GDR)
USD
9.4
6.3
7.2
8.1
6.7
20%
OVERWEIGHT
Lenta (shares)
RUB
572.3
384.4
436.7
491
397
24%
OVERWEIGHT
Dixy (shares)
RUB
350.9
362.7
35.1
275
246
12%
NEUTRAL
O'Key
USD
2.1
1.9
0.6
1.7
1.9
-13%
UNDERWEIGHT
Source: Gazprombank
9.1.6 Agriculture sector news
Russia last year became the world’s biggest exporter of grains, at more than 34m tonnes. Total Russian grain production hit a record 119m tonnes. The turnround is striking since as recently as 15 years ago — and for a couple of decades before during the Soviet era — Russia was a net importer. Russia has fully substituted imports with domestic production of pork and chicken. It has become a top producer of sugar beet; greenhouse vegetable production last year was up 30 per cent on the year before. While agriculture remains far below oil and gas, the sector has overtaken arms sales to become Russia’s second-biggest exporter.
Despite the warming in relations between Moscow and Ankara, Putin is refusing to budge on a tomato ban , keeping a lid on a market that had
104 RUSSIA Country Report April 2017
www.intellinews.com