Migros - Kipa Offers Decent Upside
We raise our target price for Migros to TRY33.38 per share after adding Kipa to our model. We maintain our BUY recommendation. We have also increased our 2017 and 2018 top-line forecasts for Migros standalone due to a more upbeat outlook. Despite short-term challenges for the company, such as margin dilution and a heavier debt burden, we think the expected turnaround at Kipa and potential cash inflow from the sale of some of Kipa's fixed assets will ultimately prove value-accretive for Migros. With the turnaround, we see EV/EBITDA falling from 9.3 in 2017E to 6.8 in 2018E, and factoring in asset sales, we expect the current LTM net debt/EBITDA of 3.8 to slide below 2.0.Migros Ticaret is a retailing group based in Turkey. Co. offers spacious stores in a wide range of formats and locations whose vast selection of stationery, glass and kitchenware, appliance, book, clothing, and other items along with groceries and other necessities. Co. maintains a store network of 1,004 national and international locations with a national presence in 70 provinces in Turkey's seven geographical regions. Store brand names include M, MM, MMM, 5M, MigroJet, Tansas, Macrocenter and Ramstores. Co. also provides customers alternatives such as internet, call centers, kiosks, catalogues, and mobile shopping networks.
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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