Page 31 - Russia OUTLOOK 2022

RUB22 trillion and RUB18 trillion respectively.
The report expects retail turnover to keep growing by 2024 and catch up with the pre-sanction peak of $600bn seen in 2020-2011. Infoline-Analytics believes that the growth rate of retail turnover against the background of lower inflation and the effect of a high base this year will gradually slow down - to 8% in 2022 and 6.5-7% in 2023-2024.
Analysts surveyed by Kommersant believe that large retail chains such as X5 Group and Magnit are the main beneficiaries of forced spending cuts on entertainment and travel during the pandemic.
Should COVID-19 limitations be eased, in 2022 large retail chains might have to seek non-organic growth through M&A. The household electronics market is seen supported by stable demand.
bne IntelliNews already highlighted that the Russian retail sector has entered a phase of rapid consolidation and mergers and acquisitions are expected to be the main growth driver for the largest Russian food retailers.
Analysts have a positive stance on the Russian retail space for 2022, seeing strong growth opportunities for all names, at a blended 1.2x in sales, with 2022F EV/EBITDA and P/E multiples that are appealing relative to EM peers (blended 5x EV/EBITDA, 10x P/E).
On top of that, all companies are becoming more attractive dividend stories, with an average 2022F DY of 10%.
Despite having Buy recommendations for all of the stocks, VTB prefers Russian food retail companies to non-food names, as uncertainty over lockdowns, QR codes and the threat of ecommerce penetration create more risks for our 2022 forecasts (although they do not undermine our long-term growth assumptions).
Within food retail, there is more upside and focus on Magnit, as it offers sales growth twice as high as at X5 in 2022F, plus it has more potential to unlock its internal operating potential. Another choice in the non-food space is with Detsky Mir, as analysts expect superior operations and dividends to Fix Price and M.video.
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