Detsky Mir - Closing Trade Idea

We are closing the tactical short-term trade idea to buy Detsky Mir that we opened on August 18. We believe the stock's short-term catalysts have now played out. In August, we expected strong 3Q20 operating results, analyst upgrades following the company's capital markets day that month and the distribution of the 4Q19 dividend in 2H20, and we also saw an attractive valuation. Our forecasts proved to be correct, and the trading idea has registered an 8.9% absolute return in ruble terms, outperforming the RTS Index by 7.4 pp. Although we are closing our short-term trade idea, we still like the company's fundamentals and we reiterate our long-term BUY recommendation on the stock.Investment caseDetsky Mir is one of the largest players in the Russian children's goods market. At its capital markets day in August, it presented three growth projects: Zoozavr, Detmir.ru and the marketplace, which we believe should help it to enter new segments and expand its geographical footprint. These projects should help the company retain growth momentum, safeguard it from online competition and maintain strong ROIC, in our view.The stock is trading at a 2021E (IAS 17) EV/EBITDA of 7.2 and offers a 8.3% dividend yield over the next 12 months. We reiterate our long-term BUY recommendation and would regard any comments on current performance or the 4Q20 trading results and financials as more possible triggers for the stock.