X5 Retail Group - 2019 Capital Markets Day Highlights
X5 Retail Group hosted a capital markets day yesterday. The management aims to expand the company's market share to 20% by 2029. In addition, starting in 2021, LFL sales growth and new projects are to become the key growth drivers as space growth slows. The capex guidance for this year was downgraded from R90 bln to R80-85 bln, and 2,000 gross openings are planned for 2020. The management said part of the gains from planned improvements in efficiency and procurement terms would be reinvested in prices in 2020, but there was no downside for the 7% EBITDA margin. The next stage of LTIP will be launched in 4Q19, with R1.7-1.8 bln to be booked. We were hoping for a larger cut to capex this year and for the savings to be directed to dividends. The stock remains our preferred exposure in food retail, as we forecast improving returns. It is now trading at a 5.9 EV/EBITDA for 2019E and 5.2 for 2020E after a recent drop in the share price.
X5 Retail Group is a holding company. The main activity of Co. is the development and operation of grocery retail stores. Co. operates a retail chain of soft-discount, supermarket and hypermarket stores under the brand names "Pyaterochka", "Perekrestok" and "Karusel" in major population centres in Russia, including but not limited to Moscow, St. Petersburg, Nizhniy Novgorod, Rostov-on-Don, Kazan, Samara, Lipetsk, Chelyabinsk, Perm, Ekaterinburg and Kiev, Ukraine.
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