vk.com/id446425943
Financials and valuation
Renaissance Capital
21 January 2019
Russian retail
Magnit
Figure 68: Magnit – income statement, RUBmn (unless otherwise stated)
Income statement |
2014 |
|
|
2015 |
2016 |
2017 |
|
2018E |
2019E |
2020E |
|
2021E |
|
Revenue |
763,527 |
950,613 |
1,074,812 |
1,143,314 |
|
1,228,925 |
1,402,892 |
1,561,954 |
1,720,062 |
||||
Growth |
32% |
|
|
25% |
13% |
6% |
|
7.5% |
14% |
11% |
|
10% |
|
Cost of sales |
(543,007) |
(679,793) |
(779,053) |
(838,672) |
|
(930,542) |
(1,063,392) |
(1,183,961) |
(1,303,807) |
||||
Gross profit |
220,521 |
270,821 |
295,759 |
304,643 |
|
298,383 |
339,500 |
377,993 |
416,255 |
||||
xx |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
28.9% |
|
|
28.5% |
27.5% |
26.6% |
|
24.3% |
24.2% |
24.2% |
|
24.2% |
|
xx |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
(8,912) |
|
(12,656) |
(12,999) |
(16,622) |
|
(14,569) |
(15,970) |
(17,482) |
(18,928) |
|||
General and administrative expenses |
(142,807) |
(175,793) |
(204,473) |
(236,348) |
|
(239,709) |
(265,637) |
(288,916) |
(320,001) |
||||
EBIT |
68,300 |
|
|
82,856 |
81,967 |
58,062 |
|
50,359 |
64,148 |
77,851 |
|
83,581 |
|
EBIT margin |
8.9% |
|
|
8.7% |
7.6% |
5.1% |
|
4.1% |
4.6% |
5.0% |
|
4.9% |
|
xxx |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
372 |
|
|
226 |
106 |
341 |
|
– |
– |
– |
|
– |
|
Finance costs |
(6,646) |
|
(11,886) |
(13,294) |
(12,979) |
|
(10,752) |
(10,394) |
(10,291) |
(10,291) |
|||
Other income |
2,891 |
|
|
3,960 |
4,036 |
7,759 |
|
7,759 |
7,759 |
7,759 |
|
7,759 |
|
Other expenses |
(579) |
|
|
(844) |
(889) |
(735) |
|
(735) |
(735) |
(735) |
|
(735) |
|
Foreign exchange gain |
(2,814) |
|
|
(2,633) |
1,139 |
134 |
|
– |
– |
– |
|
– |
|
Profit before income tax |
62,027 |
|
|
71,196 |
68,780 |
45,424 |
|
40,376 |
54,522 |
68,328 |
|
74,058 |
|
Income tax expense |
(14,341) |
(12,135) |
(14,371) |
(9,885) |
|
(8,479) |
(11,177) |
(14,007) |
(15,182) |
||||
Profit for the year |
47,686 |
|
|
59,061 |
54,409 |
35,539 |
|
31,897 |
43,345 |
54,321 |
|
58,876 |
|
Net income margin |
6.2% |
|
|
6.2% |
5.1% |
3.1% |
|
2.6% |
3.1% |
3.5% |
|
3.4% |
|
xxx |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income growth |
33.9% |
|
|
23.9% |
-7.9% |
-34.7% |
|
-10.2% |
35.9% |
25.3% |
|
8.4% |
|
EBITDA |
85,910 |
|
103,973 |
107,793 |
91,778 |
|
87,844 |
107,069 |
122,856 |
130,166 |
|||
EBITDA margin |
11.3% |
|
|
10.9% |
10.0% |
8.0% |
|
7.1% |
7.6% |
7.9% |
|
7.6% |
|
EBITDA growth |
32.7% |
|
|
21.0% |
3.7% |
-14.9% |
|
-4.3% |
21.9% |
14.7% |
|
5.9% |
|
Net debt |
77,975 |
|
|
95,837 |
111,047 |
108,123 |
|
117,770 |
106,264 |
83,293 |
|
50,234 |
|
Net debt/EBITDA, x |
0.9 |
|
|
0.9 |
1.0 |
1.2 |
|
1.3 |
1.0 |
0.7 |
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
Source: Company data, Renaissance Capital estimates |
|||
Figure 69: Magnit – DCF valuation, $mn (unless otherwise stated) |
|
|
|
|
|
|
|
|
|||||
|
|
2020E |
|
2021E |
2022E |
2023E |
2024E |
2025E |
2026E |
2027E |
2028E |
2029E |
|
EBIT |
|
1,137 |
|
1,185 |
1,278 |
1,371 |
1,426 |
1,477 |
1,523 |
1,562 |
1,595 |
1,629 |
|
EBIT * (1-Tax) |
904 |
|
942 |
1,016 |
1,090 |
1,134 |
1,174 |
1,210 |
1,242 |
1,268 |
1,295 |
||
Depreciation and LTI |
|
635 |
|
|
714 |
708 |
698 |
674 |
698 |
719 |
738 |
753 |
769 |
Capex |
(924) |
(852) |
(777) |
(727) |
(741) |
(753) |
(769) |
(782) |
(791) |
(808) |
|||
Working capital change |
|
162 |
|
|
153 |
(29) |
(31) |
(30) |
(29) |
(27) |
(26) |
(24) |
(25) |
FCFF |
775 |
|
957 |
919 |
1,030 |
1,037 |
1,090 |
1,133 |
1,172 |
1,206 |
1,231 |
||
Discount rate |
|
10.7% |
|
|
|
|
|
|
|
|
|
|
|
Terminal growth rate |
2.5% |
|
|
|
|
|
|
|
|
|
|
||
DCF |
|
701 |
|
|
782 |
678 |
687 |
625 |
593 |
557 |
521 |
485 |
447 |
Sum of DCF |
6,075 |
|
|
|
|
|
|
|
|
|
|
||
Terminal value |
|
5,615 |
|
|
|
|
|
|
|
|
|
|
|
EV |
11,690 |
|
|
|
|
|
|
|
|
|
|||
Net debt, 2019E |
|
1,584 |
|
|
|
|
|
|
|
|
|
|
|
Equity value |
10,107 |
|
|
|
|
|
|
|
|
|
|||
Number of GDRs, mn |
|
508 |
|
|
|
|
|
|
|
|
|
|
|
Target price (equity value), $/GDR |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
Source: Renaissance Capital estimates
Risks
Key downside risks to our forecasts include a material deterioration in consumer environment, lower-than-expected food inflation, poor execution of product improvement initiatives, strong competitive response from X5, inability to improve purchasing terms and higher-than-expected SG&A cost inflation.
39
vk.com/id446425943
Renaissance Capital
21 January 2019
Russian retail
X5
Figure 70: X5 – income statement, RUBmn (unless otherwise stated)
|
2014 |
2015 |
2016 |
2017 |
|
2018E |
2019E |
2020E |
|
2021E |
Revenue |
633,873 |
808,818 |
1,033,667 |
1,295,008 |
1,529,774 |
1,744,207 |
1,901,883 |
2,062,359 |
||
Growth |
19% |
28% |
28% |
25% |
|
18% |
14% |
9% |
|
8% |
Cost of sales |
(478,891) |
(610,428) |
(783,682) |
(986,070) |
(1,159,875) |
(1,325,597) |
(1,447,333) |
(1,573,580) |
||
Gross profit |
154,982 |
198,390 |
249,985 |
308,938 |
|
369,899 |
418,610 |
454,550 |
|
488,779 |
Gross margin |
24.5% |
24.5% |
24.2% |
23.9% |
|
24.2% |
24.0% |
23.9% |
|
23.7% |
SG&A |
(133,512) |
(170,065) |
(211,314) |
(259,376) |
(321,481) |
(368,740) |
(397,440) |
(425,382) |
||
Lease and other income |
6,818 |
6,124 |
6,960 |
8,196 |
|
9,833 |
11,337 |
12,362 |
|
13,405 |
EBIT |
28,288 |
34,449 |
45,631 |
57,758 |
|
58,252 |
61,207 |
69,472 |
|
76,802 |
Financial costs |
(12,175) |
(17,131) |
(17,372) |
(16,138) |
|
(17,705) |
(18,744) |
(18,744) |
|
(18,344) |
Financial income |
117 |
594 |
54 |
121 |
|
121 |
121 |
121 |
|
121 |
Share of loss of associates |
(37) |
– |
– |
– |
|
– |
– |
– |
|
– |
Foreign exchange gain |
25 |
18 |
340 |
75 |
|
(213) |
– |
– |
|
– |
Profit before income tax |
16,218 |
17,930 |
28,653 |
41,816 |
|
40,454 |
42,585 |
50,849 |
|
58,580 |
Income tax expense |
(3,527) |
(3,756) |
(6,362) |
(10,422) |
|
(9,709) |
(10,220) |
(12,204) |
|
(14,059) |
Profit for the year |
12,691 |
14,174 |
22,291 |
31,394 |
|
30,745 |
32,364 |
38,645 |
|
44,520 |
Net income margin |
2.0% |
1.8% |
2.2% |
2.4% |
|
2.0% |
1.9% |
2.0% |
|
2.2% |
EPS, RUB/GDR |
46.8 |
52.2 |
82.1 |
115.6 |
|
113.2 |
119.2 |
142.3 |
|
|
Net income and EPS growth |
16% |
12% |
57% |
41% |
|
-2% |
5% |
19% |
|
|
EBITDA |
45,860 |
55,233 |
76,267 |
96,193 |
|
107,102 |
116,772 |
125,465 |
|
132,009 |
EBITDA margin |
7.2% |
6.8% |
7.4% |
7.4% |
|
7.0% |
6.7% |
6.6% |
|
6.4% |
EBITDA growth |
20% |
20% |
38% |
26% |
|
11% |
9% |
7% |
|
|
EBITDA before LTI and exit payments |
45,860 |
59,413 |
79,519 |
99,131 |
|
109,338 |
119,156 |
128,025 |
|
|
Margin |
7.2% |
7.3% |
7.7% |
7.7% |
|
7.1% |
6.8% |
6.7% |
|
|
Net debt |
105,363 |
135,257 |
137,843 |
166,691 |
|
201,089 |
221,045 |
221,851 |
|
214,679 |
Net debt/EBITDA, x |
2.3 |
2.4 |
1.8 |
1.7 |
|
1.9 |
1.9 |
1.8 |
|
1.6 |
|
|
|
|
|
|
|
Source: Company data, Renaissance Capital estimates |
|||
Figure 71: X5 – DCF valuation, $mn (unless otherwise stated) |
|
|
|
|
|
|
|
|
||
|
2020E |
2021E |
2022E |
2023E |
2024E |
2025E |
2026E |
2027E |
2028E |
2029E |
EBIT |
1,014 |
1,089 |
1,215 |
1,321 |
1,360 |
1,393 |
1,420 |
1,440 |
1,454 |
1,461 |
EBIT * (1-Tax) |
771 |
827 |
923 |
1,004 |
1,033 |
1,058 |
1,079 |
1,095 |
1,105 |
1,111 |
Depreciation |
817 |
782 |
746 |
707 |
727 |
745 |
759 |
771 |
778 |
782 |
Capex |
(1,021) |
(878) |
(822) |
(762) |
(778) |
(790) |
(805) |
(817) |
(825) |
(829) |
Working capital change |
(45) |
(52) |
3 |
3 |
3 |
2 |
2 |
2 |
2 |
2 |
FCFF |
523 |
679 |
850 |
951 |
985 |
1,016 |
1,036 |
1,051 |
1,061 |
1,065 |
|
|
|
|
|
|
|
|
|
|
|
Discount rate |
11.0% |
|
|
|
|
|
|
|
|
|
Terminal growth rate |
2.5% |
|
|
|
|
|
|
|
|
|
Discount factor |
0.90 |
0.81 |
0.73 |
0.66 |
0.59 |
0.53 |
0.48 |
0.43 |
0.39 |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
DCF |
471 |
551 |
621 |
626 |
583 |
542 |
497 |
454 |
413 |
374 |
Sum of DCF |
5,131 |
|
|
|
|
|
|
|
|
|
Terminal value |
4,479 |
|
|
|
|
|
|
|
|
|
EV |
9,610 |
|
|
|
|
|
|
|
|
|
Net debt, 2019E |
3,294 |
|
|
|
|
|
|
|
|
|
Equity value |
6,316 |
|
|
|
|
|
|
|
|
|
Number of GDRs, mn |
272 |
|
|
|
|
|
|
|
|
|
Equity value per GDR, $ |
23 |
|
|
|
|
|
|
|
|
|
Source: Renaissance Capital estimates
Risks
Key upside risks to our forecasts include a material food inflation acceleration, a pronounced consumer recovery, intensifying traffic headwinds at Dixy, weak execution at Magnit’s and X5’s ability to significantly improve its purchasing terms and optimise its
SG&A cost structure.
40
vk.com/id446425943
Renaissance Capital
21 January 2019
Russian retail
Lenta
Figure 72: Lenta income statement, RUBmn (unless otherwise stated)
|
|
|
2014 |
2015 |
2016 |
2017 |
2018E |
2019Е |
2020Е |
2021Е |
Revenue |
|
|
193,988 |
252,763 |
306,352 |
365,178 |
417,710 |
444,803 |
475,450 |
498,949 |
Growth |
|
|
34% |
30% |
21% |
19% |
14% |
6% |
7% |
5% |
Cost of sales |
|
|
(150,131) |
(196,458) |
(238,584) |
(286,942) |
(328,445) |
(350,638) |
(376,223) |
(395,816) |
Gross profit |
|
|
43,857 |
56,305 |
67,768 |
78,236 |
89,265 |
94,165 |
99,226 |
103,133 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
22.6% |
22.3% |
22.1% |
21.4% |
21.4% |
21.2% |
20.9% |
20.7% |
|
|
|
|
|
|
|
|
|
|
|
SG&A |
|
|
(28,106) |
(36,045) |
(46,443) |
(55,918) |
(68,879) |
(73,766) |
(77,627) |
(79,963) |
Reversal of impairment of non-financial assets |
|
– |
– |
– |
(222) |
– |
– |
– |
– |
|
Other operating income |
|
|
2,267 |
2,584 |
3,086 |
4,129 |
4,823 |
5,092 |
5,395 |
5,612 |
Other operating expenses |
|
|
(359) |
(513) |
(716) |
(648) |
(648) |
(691) |
(738) |
(775) |
EBIT |
|
|
17,659 |
22,332 |
23,695 |
25,577 |
24,560 |
24,800 |
26,257 |
28,007 |
EBIT margin |
|
|
9.1% |
8.8% |
7.7% |
7.0% |
5.9% |
5.6% |
5.5% |
5.6% |
|
|
|
|
|
|
|
|
|
|
|
Interest expenses |
|
|
(6,911) |
(10,045) |
(10,085) |
(10,943) |
(9,316) |
(8,575) |
(6,967) |
(5,367) |
Interest income |
|
|
100 |
768 |
852 |
446 |
450 |
469 |
520 |
592 |
Other |
|
|
(61) |
6 |
– |
– |
– |
– |
– |
– |
FX |
|
|
140 |
(189) |
91 |
92 |
(74) |
– |
– |
– |
Profit before income tax |
|
|
10,928 |
12,872 |
14,553 |
15,172 |
15,620 |
16,694 |
19,810 |
23,232 |
Income tax expense |
|
|
(1,853) |
(2,584) |
(3,351) |
(1,908) |
(3,436) |
(3,673) |
(4,358) |
(5,111) |
Profit for the year |
|
|
9,075 |
10,288 |
11,202 |
13,264 |
12,184 |
13,022 |
15,452 |
18,121 |
Net income margin |
|
|
4.7% |
4.1% |
3.7% |
3.6% |
2.9% |
2.9% |
3.2% |
3.6% |
Net income growth |
|
|
27.0% |
13.4% |
8.9% |
18.4% |
-8.1% |
6.9% |
18.7% |
17.3% |
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
21,318 |
28,003 |
31,390 |
35,268 |
36,993 |
38,102 |
39,491 |
40,894 |
EBITDA margin |
|
|
11.0% |
11.1% |
10.2% |
9.7% |
8.9% |
8.6% |
8.3% |
8.2% |
Net debt |
|
|
59,180 |
53,485 |
89,163 |
92,780 |
94,114 |
81,626 |
61,013 |
37,248 |
Net debt/EBITDA, x |
|
|
2.8 |
1.9 |
2.8 |
2.6 |
2.5 |
2.1 |
1.5 |
0.9 |
|
|
|
|
|
|
|
|
Source: Company data, Renaissance Capital estimates |
||
Figure 73: Lenta – DCF valuation, $mn (unless otherwise stated) |
|
|
|
|
|
|
|
|||
|
2020E |
2021E |
2022E |
2023E |
2024E |
2025E |
2026E |
2027E |
2028E |
2029E |
EBIT |
380 |
393 |
407 |
416 |
418 |
420 |
422 |
424 |
426 |
428 |
EBIT * (1-Tax) |
296 |
307 |
317 |
325 |
326 |
328 |
329 |
331 |
332 |
334 |
Depreciation |
191 |
181 |
170 |
161 |
162 |
162 |
163 |
164 |
165 |
165 |
Capex |
(123) |
(106) |
(106) |
(124) |
(202) |
(203) |
(196) |
(197) |
(198) |
(198) |
Working capital change |
6 |
4 |
3 |
2 |
3 |
3 |
3 |
3 |
3 |
3 |
FCFF |
371 |
386 |
384 |
364 |
289 |
290 |
299 |
301 |
302 |
303 |
Discount rate |
11.1% |
|
|
|
|
|
|
|
|
|
Terminal growth rate |
2.5% |
|
|
|
|
|
|
|
|
|
Timing |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
NPV of cash flows |
334 |
313 |
280 |
239 |
170 |
154 |
143 |
130 |
117 |
106 |
Total NPV of cash flows |
1,986 |
|
|
|
|
|
|
|
|
|
Terminal value |
1,262 |
|
|
|
|
|
|
|
|
|
EV |
3,248 |
|
|
|
|
|
|
|
|
|
Net debt, 2019E |
1,216 |
|
|
|
|
|
|
|
|
|
Equity value |
2,032 |
|
|
|
|
|
|
|
|
|
Number of GDRs, mn |
487 |
|
|
|
|
|
|
|
|
|
TP, $/GDR |
4.2 |
|
|
|
|
|
|
|
|
|
Source: Renaissance Capital estimates
Risks
Key downside risks to our forecasts include a material deterioration in consumer environment, lower-than-expected food inflation, higher-than-expected competitive pressure from smaller formats and a more pronounced profitability pressure vs our forecasts on the back of soft sales densities dynamics and higher-than-expected SG&A cost inflation.
41
vk.com/id446425943
Renaissance Capital
21 January 2019
Russian retail
Figure 74: EEMEA peer valuations
Company |
Currency |
Share |
YtD, % |
MktCap, |
|
EV/EBITDA, x |
|
P/E, x |
|
|
EV/sales, x |
|||
price* |
$mn |
2018E 2019E |
2020E |
2018E |
2019E |
2020E |
2018E |
2019E |
2020E |
|||||
|
|
|
||||||||||||
EEMEA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Magnit** |
$ |
15.3 |
20.0 |
7,781 |
6.9 |
5.9 |
5.0 |
15.2 |
12.0 |
9.8 |
0.5 |
0.4 |
0.4 |
|
Magnit Local** |
RUB |
4,114.0 |
17.2 |
6,325 |
6.1 |
4.9 |
4.1 |
13.1 |
9.7 |
7.7 |
0.4 |
0.4 |
0.3 |
|
O’Key |
$ |
1.5 |
11.1 |
404 |
5.6 |
5.3 |
4.7 |
20.6 |
11.1 |
33.9 |
0.3 |
0.3 |
0.3 |
|
X5** |
$ |
26.7 |
7.9 |
7,262 |
6.1 |
6.1 |
5.7 |
14.7 |
15.1 |
12.9 |
0.4 |
0.4 |
0.4 |
|
Lenta** |
$ |
3.4 |
8.8 |
1,634 |
5.3 |
5.0 |
4.4 |
8.3 |
8.4 |
7.2 |
0.5 |
0.4 |
0.4 |
|
Average |
|
|
|
|
6.0 |
5.4 |
4.8 |
14.4 |
11.3 |
14.3 |
0.4 |
0.4 |
0.3 |
|
Bim Birlesik Magazalar AS |
TRY |
90.3 |
3.7 |
5,116 |
14.5 |
12.1 |
9.7 |
23.0 |
19.6 |
16.0 |
0.8 |
0.6 |
0.5 |
|
Bizim Toptan Satis Magazalar |
TRY |
6.2 |
-9.3 |
69 |
2.0 |
1.5 |
1.3 |
17.6 |
16.4 |
13.7 |
0.1 |
0.0 |
0.0 |
|
Migros Ticaret AS |
TRY |
14.7 |
-1.7 |
496 |
5.7 |
4.9 |
3.9 |
na |
na |
37.8 |
0.3 |
0.3 |
0.2 |
|
SOK |
TRY |
10.6 |
-1.4 |
1,211.2 |
26.4 |
26.4 |
26.4 |
20.9 |
13.7 |
10.3 |
0.5 |
0.4 |
0.3 |
|
Eurocash Sa |
PLN |
20.0 |
13.7 |
740 |
8.5 |
6.8 |
6.2 |
25.5 |
18.2 |
15.2 |
0.1 |
0.1 |
0.1 |
|
Jeronimo Martins |
EUR |
11.9 |
15.0 |
8,530 |
7.8 |
7.3 |
6.8 |
18.3 |
17.0 |
15.5 |
0.4 |
0.4 |
0.4 |
|
Massmart Holdings Ltd |
ZAc |
11,190 |
8.1 |
1,771 |
8.0 |
7.0 |
6.4 |
19.1 |
16.0 |
13.9 |
0.3 |
0.3 |
0.2 |
|
Dino |
PLN |
102 |
6.6 |
2,662 |
19.9 |
15.4 |
12.3 |
32.9 |
24.9 |
19.6 |
1.8 |
1.4 |
1.1 |
|
Pick N Pay Stores Ltd |
ZAc |
7,500 |
10.7 |
2,681 |
11.4 |
10.4 |
9.2 |
24.1 |
20.4 |
17.7 |
0.4 |
0.4 |
0.4 |
|
Shoprite Holdings Ltd |
ZAc |
18,810 |
-1.1 |
8,104 |
10.4 |
9.8 |
8.7 |
19.6 |
18.8 |
17.0 |
0.7 |
0.7 |
0.6 |
|
Spar Group Limited/The |
ZAc |
20,260 |
-2.4 |
2,843 |
11.3 |
10.9 |
9.9 |
19.3 |
17.3 |
15.7 |
0.4 |
0.4 |
0.4 |
|
Woolworths Holdings Ltd |
ZAc |
4,942 |
-10.3 |
3,775 |
8.2 |
7.6 |
6.8 |
14.1 |
13.5 |
11.9 |
0.8 |
0.9 |
0.8 |
|
Average |
|
|
|
|
11.2 |
10.0 |
11.2 |
21.3 |
17.8 |
17.0 |
0.6 |
0.5 |
0.4 |
|
*Current intraday prices at time of writing on 18 January 2019.
**Renaissance Capital estimates for Magnit, X5 and Lenta; all other estimates based on Bloomberg consensus data.
Source: Bloomberg, Renaissance Capital estimates
42