Russian Retail - 2Q17 To Be an Inflection Point
Russia's listed retailers will start to report 2Q17 operating and financial result results on July 14. After the disappointing 1Q17, we expect a more upbeat set of numbers. In fact, we believe the upcoming results carry a high significance - 2Q should mark an easing of the headwinds. Magnit and O'Key should deliver top-line acceleration, while X5 Retail Group and Lenta will see flat sales growth, and Dixy and Detsky Mir will see a deceleration. We revised downward our projections for Lenta (by 4.9% on EBITDA in 2017), reducing our target price to $7.6 per GDR, but upgrade our recommendation to a BUY. We suggest buying Magnit and X5 Retail Group ahead of the results.Detskiy Mir PAO is a Russia-based company, which is primarily engaged in the children products retail sector. The Company offers a wide range of products, such as toys, clothing and footwear, baby goods, stationery, school and learning related products, creative kits, sport related products, food, car seats, furniture, among others. The Company's structure includes the chain of stores Detskiy Mir and the retail network ELC (Early Learning Center). The Company's Detskiy Mir chain comprises over 480 stores located on the territory of the Russian Federation and Kazakhstan, as well as more than 40 ECL stores. Detskiy Mir PAO is primarily active domestically and in the Commonwealth of Independent States (CIS) countries. In addition, the Company sells products online via its Website. The Company's major shareholder is AFK Sistema PAO.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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