Page 152 - RusRPTNov21

and 27%): Buys reiterated.
3Q21 IFRS; strong. Revenues advanced 28% y/y to RUB489bn while on a standalone basis, Magnit grew 13% y/y. Consolidation of Dixy caused a 7-10bp y/y dilution in profitability, while Magnit’s robust results were sufficient to offset that and provide a flat y/y EBITDA margin of 7.2%. The net margin gained 30bp y/y to 2.8% while net income surged 41% y/y to RUB13.6bn. Overall, revenues and EBITDA met our and consensus estimates, while net income was 4-6% higher than anticipated. The Dixy acquisition price stood at RUB97bn and was the prime driver for a leverage expansion by RUB112bn YTD, but only to a manageable leverage level of 1.9x net debt/EBITDA.
Magnit has released strong 3Q21 IFRS numbers, which featured 28% YoY revenue growth on Dixy consolidation and no decline in the EBITDA margin (7.2%) amid dilution by the target (7-10bp). On a standalone basis, which we see as a more appropriate measure for comparison, the growth accelerated only to 13% YoY from 10% in 2Q21, driven by LFL improvement (8.6% YoY vs. 5.3% YoY). The Dixy deal caused net debt expansion of RUB 112bn YTD, while net debt/EBITDA went up from 1.1x to 1.9x over the period. We incorporate Dixy into our model and now anticipate revenues to go up 19% YoY and 16% YoY in FY21F and 2022F, respectively. We have left our EBITDA margin at 7.0%, while acknowledging upside risks from a rapid and efficient integration and the company’s overall guidance for an 8% margin in the medium term. Our key P&L lines are up a blended 25%, reflecting that Dixy’s scale while gap to X5 on revenues declines to 9% in 2022F from 27% in 2020. These lifted forecasts and the valuation date roll offset 100bp higher WACC (13%) and lead to us raising our 12-mo TPs 27-29% to USD 24.50 and RUB 8,000 (ETRs of 37% and 27%): Buys reiterated.
O'Key released its trading update for 3Q21. Net retail revenues increased 10.1% y/y (amid 6.6% LFL sales growth) to R43.4bn, which marked an acceleration from 6.1% y/y sales growth in 2Q21 (partially on the low base of 3Q20, when top-line growth was just 3.6% y/y).
Revenues generated by hypermarkets rose 4.6% y/y in 3Q21, accompanied by a 0.3% decrease in selling space at hypermarkets and 3.8% LFL sales growth. The net retail revenues of the DA! discounters were up 40% y/y to R8.7bn, or 20% of the group's total sales in 3Q21 (up from 16% in 3Q20).
Online sales (through the company's own delivery service in Moscow and St Petersburg and delivery operators across Russia) rose 139% y/y to R1.1bn in 3Q21, reaching 3.2% of total revenues. The company opened seven discounters last quarter, ending the quarter with 206 stores (including 77 hypermarkets and 129 discounters) and total selling space of 604k m2, up 2.3% y/y.
It was also mentioned that O'Key's own brands accounted for 8.0% of hypermarkets' and 50.2% of the discounters' net retail revenues in 3Q21. Notably, the popularity of private labels among O'Key's customers was confirmed by our last Ivanov survey.
152 RUSSIA Country Report November 2021 www.intellinews.com