Page 117 - RusRPTMay19

(aka Euroopt) twice tried to IPO in London last year and is expected to try again this year. VTBC has the stock market up as a Buy with a 47% upside to the 12-month target price of RUB120.
● X5
X5 Retail Group has released a robust 1Q19 trading update on April 19, which matched analysts forecasts. Revenues added 15.3% y/y (or 16.4% y/y, adjusted for the VAT increase) vs. 17.1% y/y in 4Q18. Total LFL improved 130bp q/q to 5.0% y/y, fuelled by the 2.7% y/y traffic inflow and 2.2% y/y ticket inflation. Promising factors included a 210bp q/q uplift in food inflation to 5.8% and a traffic rebound in Moscow Pyaterochkas vs. the negative performance in 2018. Net openings of 348 stores were pressured by 85 convenience format closures and the termination of 55 Perekrestok Expresses; the 2019 guidance for 2,000 new stores was reiterated. The numbers create a solid outlook for the 1Q19 IFRS release on 25 April, where we expect the EBITDA margin to improve 50bp y/y to 6.6% on a comparable gross margin recovery from improved commercial terms and lower shrinkage. For 2019, our model is intact at 14% y/y revenue growth and a flat y/y EBITDA margin of 7.0%. Our unchanged 12mo TP of $34 implies a 32% ETR, making the name our preferred sector exposure.
Russia’s leading retail group X5 Retail Group posted 15.5% y/y increase in revenues in the first quarter of 2019 on the back of 5% y/y growth in like- for-like sales and 15.1% y/y increase in selling space. Ebitda jumped by 32.6% year-on-year, while net profit soared 65% to RUB9.3bn. X5 posted “very strong results, beating our expectations on EBITDA by 9% and net income by 21%. EBITDA margin reached solid 7.3% versus expected 6.7% - strong positive,” BCS Global Markets commented on April 25. Net cash from operating activities rose 25.6% y/y to RUB17.2bn, while net cash generated from financing activities remain negative at RUB6bn. X5 total debt amounted to RUB202bn. Net debt/EBITDA ratio stood at 1.59x as of March-2019, which BCS GM sees as comfortable.
X5 Retail Group will develop a pick-up network with Ozon. X5 announced its plans to develop 2,000 pick-up points and some 2,000 parcel lockers, in partnership with the major Russian online retailer Ozon Holdings. The network is to be developed in Pyaterochka stores – across various regions in which the X5 format operates – by the end of 2020. Customers would also be eligible to pick up their orders at checkout counters of stores, as well as at X5 OMNI partners’ pick-up points. Under X5 OMNI, there are currently 2,200 parcel lockers, which have already processed more than 800,000 parcels.
● Other
Russia's third largest retailer Lenta reported revenue growth of 6% in the first quarter of 2019 to RUB99bn ($1.5bn) in 1Q19. Lenta's core retail revenue growth slowed from 11.3% in 4Q18 to 9.9% in 1Q19 as a result of slower space growth and supermarket closures, Sberbank CIB wrote on April 26. Meanwhile, LFL [like-for-like] sales growth further accelerated from 2.1% in 4Q18 to 5% in 1Q19 thanks mainly to an increase in traffic. Lenta is in focus due to an ongoing acquisition by steel tycoon Alexei Mordashov, which was being studied by minority shareholders who are interested in a competing offer from rival retailer Magnit. "Lenta is in the process of being acquired by Severgroup, so the operating trends are of limited importance at the moment," Sberbank reminds.
117 RUSSIA Country Report May 2019 www.intellinews.com