Page 105 - RusRPTJul19

complex of 70,000 square meters in the Leningrad region for RUB3.5bn ($55mn) and will use the facilities to set up the production of semi-finished and pre-packed food products, Vedomosti daily reported on June 21 citing sources close to the deal. The acquisition is the largest deal on the warehouse market this year and the first for the company since Mordashov got involved in Lenta's business. The new facilities will centralise Lenta's branded production and serve over 100 retail outlets in more than 20 cities of Russia's North-Western region. Lenta operates 12 distribution centres across the country to serve 245 hypermarkets and 132 supermarkets with total floor space of 1.4mn square meters in 88 Russian cities.
Perekrestok’s online store, that belongs to the X5 Retail Group, has added 900 SKU in the pets category in partnership with Royal Canin, Purina, Pro Plan, Hills and others. By YE19, the assortment is to be extended to 3,000 SKU, with the pets category to be in 20-25% of tickets. Goods are supplied by the partner, then promoted and sold by X5.
Russia's largest retailer X5 Group is cementing its leadership and further improving the investment case, Sberbank CIB analysts wrote on June 26 in a note "VIVE LE ROI!". "X5 Retail Group's Enterprise Value/Ebitda has recovered to the two-year average, which has been a signal to take profits in the past. However, we now see even higher multiples as justified, as the company benefits from a more favourable market environment," Sberbank CIB wrote. X5 is intense rivalry with its largest competitor Magnit and has been taking an upper hand due to deeper focus on online sales and delivery solutions. The advantage could be further enhanced by Magnit's CEO Olga Naumova leaving the company this week. Sberbank upgraded the medium- term Ebitda margin projection for X5 from 7.0% to 7.4%, being the highest in the segment, while assuming incremental ROI of 20% over 2020-2021.
"While the market is concerned about the RUB90bn capex program for 2019, we think it is possible that either capex will be downgraded or Ebitda will come in higher than projected. We raise our target price to $37.00 per GDR and reiterate our BUY recommendation," Sberbank wrote.
Retailer Perekrestok’s online platform will start selling the products of Russia’s largest pet store chain Bethowen, Vedomosti daily reported on June 21 citing representatives of both companies. Part of the X5 Retail Group, this is the second recent announcement from Perekrestok that it will be expanding its online retail scope and assortment. Last week X5 and Santens Service Group said they would set up an online pharmaceutical marketplace on the basis of Perekrestok.ru. More than 900 items sold by Bethowen will be added to the retailer's online platform, mostly focused on pet food, and that will be expanded to 2,000 items by the end of July and then 3,000 by the end of 2019. There is a large upside potential for X5 online retail, say analysts, as in 2018 Perekrestok-online posted sales of RUB1.8bn, or only 0.5% of X5 revenues, but that should triple to 1.5% in 2019.
One of the largest Russian car importers and dealers Rolf had its offices in Moscow and St Petersburg searched by law enforcement authorities in connection with a criminal case that has been opened against founder and owner of the company Sergey Petrov. Petrov and top mangers of the company are suspected of embezzling RUB4bn ($63.5mn), the Investigative Committee’s press service reports as cited by Russian Legal Information Agency (RAPSI). Petrov commented to Vedomosti daily that he and his family are abroad, and saw the charges as an attempt to raid the company. The
105 RUSSIA Country Report July 2019 www.intellinews.com