Lenta - Opex Pressure, Capex Increase
Lenta has reported 1H19 results. EBITDA came in 4% below the consensus due to a spike in opex. The company booked a net loss of R4.5 bln for the period driven by R9.0 bln of asset impairments. It said it could close up to nine hypermarkets this year, two of which have already been closed. The hypermarkets will remain under pressure, in our view. We downgrade our full-year EBITDA forecast by 4%. We lower our target price to $3.50 per GDR from $4.00 and downgrade our recommendation to HOLD.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.
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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