Page 113 - RusRPTFeb22

store (sales up 17% y/y to RUB124bn, 70% of the total), which smoothed sales during pandemic lockdowns and the introduction of QR codes in shopping malls in November-December. Despite resilient revenues, we are less upbeat on profitability (expecting a 5.0% adjusted EBITDA margin in 2021F), given aggressive price competition and the uncertainties surrounding annual rebates. M.Video’s stock has declined 50% in the last twelve months and now trades at a 2022F EV/EBITDA of 3.5x, P/E of 11x, and DY of 10.5%, while the dividend distribution does not have downside risks, in our view. Thus, these multiples suggest rerating potential when competition and profitability stabilise, and the recently appointed CEO completes the strategy adjustments.
Beluga Group has announced the opening of its 1,000th WineLab outlet.
As of December 2021, the number of loyalty programme participants had exceeded 4.2mn (up 56% over the year). One of Beluga Group’s prime medium-term strategy pillars is developing its own retail network. The company targets a surge in footprint to 2,500 stores by 2024 which, in our model, requires opening 460 stores each year and returns a selling space CAGR of 40%. The announced roll-out milestone generally corresponds to our estimate of 900 outlets as of YE21F, while geographically the company continues to focus on the capitals. We model retail revenues surging from 35% of the total to 55%, as a result, in 2021-25F Beluga's shares have lost 5% in the last three months and now demand 2022F EV/EBITDA of 5x and P/E of 9x, which we see as appealing.
Beluga Group has released strong 2021 operating results. In production and distribution, volumes slightly renewed their record high performance (up 1% YoY to 17.5mn 9L cases), above the elevated base of upbeat demand from the previous year. In the retail segment, the rollout was slightly faster than we anticipated (1,000 stores as of YE21), lifting sales growth (32% YoY) ahead of our estimate (25% YoY). Beluga Group has been fully delivering on its five-year strategy, which envisages a sector-leading growth profile (we see a 2022-25F CAGR of 20%) while the 2022F EV/EBITDA of 5x and P/E of 9x are appealing. We keep our 12-month Target Price of RUB 5,000, which implies an ETR of 53% and a Buy recommendation.
● The production and distribution segment saw flattish volumes for 2H21 and 2021, despite the elevated base as 2020 (which was affected by stock-up purchases and the demand uptick during the lockdown).
● Own alcohol production trimmed slightly (3% YoY for 2021 and 2H21), mostly reflecting the elevated base. This was more than offset by the 20% YoY surge in imported volumes, that accounted for 17% of the total and further added to the portfolio premiumisation.
● Export sales increased 77% YoY in 2021 overall, and more than doubled for the super-premium Beluga brand. The latter saw
113 RUSSIA Country Report February 2022 www.intellinews.com