Russian Food Retail: The Empire Strikes Back (initiation of coverage: X5, BUY; Magnit (local), HOLD; Magnit (GDR), SELL)
We initiate coverage of X5 with a BUY (price target (PT) of USD 38.0/share), and Magnit with a HOLD (PT of RUB 11,360) for local shares and a SELL (PT of USD 37.4) for GDRs. Russia is coming back into the spotlight. Within the retail sector, we prefer new Russian FMCG market leader, X5, over previous champion, Magnit, due to its: i) superior growth profile; ii) cheaper valuation; and iii) comparable store ROIC. In our view, the valuation gap should continue to narrow, with the potential trigger being the increasingly likely MSCI inclusion of X5, which would wipe out the scarcity value factor of Magnit’s GDRs.
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.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.