Lenta confirmed at BUY, TP USD 5.1 - Re-emergence of a growth story
We confirm our BUY recommendation for Lenta and increase our TP to USD 5.1 (RUB 390) from USD 5.0 (RUB 380) before We expect smaller stores (Lenta Super and Lenta Mini) to drive the companys sales going forward
We forecast 14.4% revenue, 10.3% EBITDA and 8.0% net profit 2021-25e CAGRs
As Lenta prioritises expansion over dividends and still has no dividend policy in place, we expect no dividends to be paid in 2021-25e
Lenta is a hypermarket group based in Russia. Co. operates 87 hypermarkets in 50 cities across Russia and 16 supermarkets in the Moscow region with a total of approximately 571,328 sq.m. of selling space. Co. also operates four distribution centers for hypermarkets and one for supermarkets. operates three hypermarket formats: Standard, typically with approximately 7,000 sq. m. of selling space (smaller than many Western European hypermarkets) and 24,000 stock keeping unit (SKUs); Compact, typically with approximately 5,000 sq. m. of selling space and 20,300 SKUs; and Supercompact, typically with approximately 3,000 sq. m. of selling space and 15,000 SKUs.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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