Page 111 - RusRPTFeb22

modest, in our view, as the quarterly EBITDA margin of 6.5% we forecast brings only a 30bp y/y gain from a low base. We see the prime pressure coming from December, when elevated inflation ate into consumers’ budgets and likely required higher price investments. In our model, more rapid growth is offset by softer margins and results in our generally unchanged estimates. For 2022, we factor top line growth of 11% y/y, as hard discounters are yet not fuelling the expansion (only 300 openings), while our base case for the EBITDA margin is 7.0%.
• Magnit
Magnit announced, 20 January, that it had appointed Alexey Kornya as an Executive Director and a Deputy CEO. Alexey Kornya will be accountable for e-commerce, finance, legal affairs and risk management of the company. His main assignment is to boost and sustain digital development of the retailer, among other things. Mr. Kornya served as president of MTS during 2018-21 (he joined MTS in 2004 as Financial Director in the Ural Federal District) and has an extensive administrative and financial expertise. We believe this is positive news for MGNT. Alexey Kornya should be capable of sustaining the retailer's omnichannel business model while enforcing its presence in e-grocery market in the middle term.
• Detsky Mir
Detsky Mir’s 4Q21 trading update shows revenue growth slowing to 6.3% y/y, from 14% y/y in 3Q21 and underperforming our forecast of 10% y/y.
The prime issue was LFL, that turned negative for the first time in the company’s reporting history, as lockdown restrictions and QR codes pressured traffic (8.5% y/y outflow in 4Q21). We leave our 2021F estimates almost intact but trim 2022-26F net income 10% on the softer top line outlook. For 2022F, we now factor a 12% y/y revenue expansion (from 15% y/y before) and anticipate a rebound from 2H22 on the improving comparison base and the roll-out of new formats picking up. We are reducing our 12-month TP 6% to RUB150 but reiterating our Buy recommendation on the 65% ETR. The stock has lost 35% in the last three months and now demands 2022F EV/EBITDA of 5x and P/E of 7x, while offering a sector-leading DY of 16%.4Q21 trading update; lockdown in the spotlight. During the quarter, revenues grew 6.3% y/y to RUB47bn, tangibly slower than the 14% y/y in the previous quarter. Detsky stated that 3% of stores were closed during the lockdown (28 October-7 November) and 35% of its base only worked for pick ups. Additionally, 30-40% of malls where Detsky stores were located required a QR code to enter in November and December, putting extra pressure on traffic. We also note that
111 RUSSIA Country Report February 2022 www.intellinews.com