Overview of Russian retailers. What to choose for a retail investor

TutorialComparator

Обзор российских ретейлеров. Что выбрать розничному инвестору

Обзор российских ретейлеров. Что выбрать розничному инвестору

Обзор российских ретейлеров. Что выбрать розничному инвестору

Community

WriteTutorialComparison

Обзор российских ретейлеров. Что выбрать розничному инвестору

Обзор российских ретейлеров. Что выбрать розничному инвестору

Обзор российских ретейлеров. Что выбрать розничному инвестору

Community

Обзор российских ретейлеров. Что выбрать розничному инвестору

Investments

Обзор российских ретейлеров. Что выбрать розничному инвестору

Business

Обзор российских ретейлеров. Что выбрать розничному инвестору

Analysis of laws

Обзор российских ретейлеров. Что выбрать розничному инвестору

Spending diaries

Обзор российских ретейлеров. Что выбрать розничному инвестору

Calculators

Обзор российских ретейлеров. Что выбрать розничному инвестору

Travels

Обзор российских ретейлеров. Что выбрать розничному инвестору

Medicine and health

Обзор российских ретейлеров. Что выбрать розничному инвестору

Tests

Обзор российских ретейлеров. Что выбрать розничному инвестору

PropertySee all

Investment fees

Overview of Russian retailers. What to choose for a retail investor

Обзор российских ретейлеров. Что выбрать розничному инвестору

Let's analyze Russian retailers using the example of its seven main representatives, which are traded on the Moscow Exchange.

Key players

Х5 Group (MOEX: FIVE) Is the largest Russian food retailer, which consists of the following brands: shops near the house "Pyaterochka", supermarkets "Perekrestok", hypermarkets "Karusel", hard discounters "Chizhik", online hypermarket "Perekrestok Vprok", last mile delivery service 5Post, own aggregator "About", Media platforms Food.ru, financial service "X5 Bank" and service of ready-made food "Much salmon".

"Magnet" (MOEX: MGNT) Is the second largest Russian grocery retailer by market share, which is also the leader in the number of stores and the geography of their location. The company operates within a multi-format model, which includes convenience stores and drogerie stores, supermarkets and pharmacies. As of 31 December 2020, Magnit owned 21 564 store in 66 regions of Russia.

Fix Price (MOEX: FIXP) Is an international chain of stores for the whole family with a wide range of household goods at low fixed prices. The retailer's network consists of more than 4750 stores in Russia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Latvia and Uzbekistan.

"Child's world" (MOEX: DSKY) Is the largest Russian retailer of children's products in Russia, Kazakhstan and Belarus, which works in the middle price segment. The company develops the following formats: large area shops "Detsky Mir", online store and marketplace detmir.ru, "Detmir" super small-format store and "Zoozavr" chain of goods for animals.

"Ribbon" (MOEX: LNTA) Is a large Russian retailer, founded in 1993 in St. Petersburg. The company operates the largest hypermarket chain in the country, which has 255 stores. Beyond hypermarkets, Lenta operates in the supermarket segment, develops online sales, and also recently entered the convenience store market with its own brand "Mini Lenta".

"M Video" (MOEX: MVID) Is a leading Russian chain of stores in the field of e-commerce and retail of electronics and household appliances. The retailer's business relies on two brands - "M-video" and "Eldorado". The company occupies about a quarter of the Russian household appliances market, and in terms of sales volume is one of the world's ten largest players in its segment.

"OK" (MOEX: OKEY) Is a Russian retail chain, which specializes in food trade. The company works with three formats: O'KEY hypermarkets, discounters "Yes!"And an online store, which ensures the delivery of products to the buyer's door.

Key financial indicators of companies

X5 Magnet Fix Price DM ribbon M Video OK
Number of stores, PC. 18 648 25 315 4753 1014 674 1178 206
total area, thous. м² 8212 8723 1022 1179 1726 2081 605
Capitalization, billion rubles 651 675 517 100 108 106 12,4
What is the price of the chain store, million rubles 34,9 26,7 108,8 98,6 160,2 90 60,2
How much revenue does the store bring in a year?, million rubles 114 67,9 46,7 159,3 683 387,7 882
  GDP : Goodrich Petroleum Corporation

Market

Consider three markets: baby goods, where Detsky Mir works, household appliances and electronics, whose main player is "M-video", and a food market with five issuers.

Children's goods market. Its leader is "Children's World", he takes a share 22% on the entire Russian market and share 64% in the online sales market among online stores of children's goods. In 2020, having equally strong offline- and online sales channels helped the retailer to show an increase in financial results even taking into account the fact, that some of the chain's stores were closed due to quarantine restrictions.

Обзор российских ретейлеров. Что выбрать розничному инвестору

Household appliances market. Its leader is "M-video" with a share 27%. According to the retailer, the entire Russian consumer electronics market is estimated at more than $ 25 billion, with average annual growth rates over the past five years 10%. At the same time, in 2020 the market grew stronger - by 22%, due to increased demand from buyers.

Обзор российских ретейлеров. Что выбрать розничному инвестору

Food market. The total market volume is estimated at 16.4 trillion rubles. Market leader - X5 Group with a share 12,8%. The attractiveness of the Russian food retail market is in its scale, and it also offers significant growth and consolidation opportunities for large players: total market share of the ten largest retailers in total 37%.

The online sales segment has the highest growth potential in the Russian food market, which by 2023 should grow by more than 4,5 times from the current values ​​of 155 billion rubles to 704 billion rubles. Of the five grocery stores presented, only one company is included in the top ten online retailers - X5 Group, which, moreover, occupies a leading position in this sales channel.

Russian food market in shares

2020 2019
Х5 Group 12,8% 11,5%
Magnet 8,8% 7,6%
Red & white 6,6% 5,7%
ribbon 2,7% 2,5%
Auchan 1,5% 1,5%
Traffic lights 1,3% 0,7%
Underground 1,2% 1,1%
OK 1,1% 1%
Coin 0,8% 0,7%
Vkusville 0,8% 0,6%

10 leading online grocery retailers in the Russian Federation

Market share in 2020 year Market share in 2019 year
Х5 Group 12,6% 10,2%
Sbermarket 11,2% 3,7%
Vkusville 9,4% 0,5%
Wildberries 9% 4,7%
Platypus 9% 19,5%
Ozon.ru 8,1% 12,8%
Yandex store 6,7% 0,7%
Kick scooter 5,8% 0,9%
iGooods 4,3% 5,3%
alphabet of taste 2,3% 4%

Transformation of the Russian food market in shares

2019 2020 2021 2023 2030
Online 0,3% 0,9% 1,7% 4% 11%
Convenience stores 27% 29% 30% 32% 35%
Supermarkets 22% 21% 20% 19% 15%
Hypermarkets 13% 11% 10% 9% 5%
Hard discounters 2% 3% 3% 4% 5%
Other formats 12% 14% 16% 16% 20%
Traditional formats 24% 21% 19% 16% 9%
  US stock market. 11 sectors in detail

Growth Drivers

Х5 Group. The company has two main drivers of growth. The first is the IPO of the online segment: it can take place in 2022-2023 after attracting a strategic partner. According to media reports, the valuation of this X5 digital business will be in the range of $ 3 billion to $ 4.5 billion, which corresponds to 32-48% of the current capitalization of the company. The second factor is organic growth, which will lead to an increase in financial performance and dividends. The retailer intends to open more than 7 thousand new stores in the next three years, current number of X5 stores - 18 648.

"Magnet". The main driver is the growth of the network. As part of the strategy, the company plans to open neighborhood stores a year until 2025 - 1000-1500, cosmetics stores - 750-1000, supermarkets and superstores - 5-15.

Fix Price. Key message is double-digit growth in financial performance, his company plans to achieve by increasing its network to 15 500 shops, now the chain has 4753 stores. The company also plans its growth by increasing the Russian market for goods at low prices., annual CAGR of which until 2025 will be 20%.

"Child's world". The most important factor in the company's growth is the development of online- and offline segments, at which the retailer will continue to show growth in financial indicators by 10-15% and a double-digit dividend yield. By 2024, Detsky Mir plans to double its chain of stores and bring the share of online sales in total results to 45% against the current 27%.

"Ribbon". The main driver of growth is the new dividend policy. The company will pay more 100% FCF, if the net debt / EBITDA multiple is below 1.0 ×, to 100% FCF, if this ratio is from 1.0 × to 1.5 ×, no more 50% FCF, if more than 1.5 ×.

Investors should expect large payments only after 2023: now "Lenta" is holding M&A-transactions, that eat up the whole FCF. for example, this year FCF for 9 months is negative and equal to -13.6 billion rubles against the background of the acquisition of two networks for more than 20 billion rubles, and in 2022 and 2023 the retailer plans to consider new mergers and acquisitions.

"M Video". The main idea in the company's shares is dividends, the large payout of which is protected by the fact, that the main owner of the retailer M. Gutseriev needs money to reimburse the Central Bank. By 2024, the majority shareholder of M-Video must return about $ 2 billion to Otkritie and Trust banks.

"OK". The key growth factor is the development of a network of discounters “Yes!»: on the horizon of four years, their share in the total indicators of the retailer should increase from the current 19% to 50%. This will happen due to the growth of the discounter network - by 2024, O'Key plans to open 200 new stores.!», at the moment stores 129. Current network cost "Yes!»44.5 billion rubles on average. This is more than three times the current capitalization of the entire O'Key.

  Global change in the US stock market.

Profit distribution

Russian retailers are trying to distribute all earned net profit to dividends.

Х5 Group. The retailer plans to maintain payments at the level of 2020 at least annually in the next three years - this is 50 billion rubles, as a maximum - to increase dividends on 10% in year. In 2021, the company expects to return 50 billion rubles to shareholders, what corresponds to the payment 184,135 Р на 1 GDR and 7.5% dividend yield.

"Magnet". In the dividend policy, the retailer does not have a fixed profit distribution rate, at the same time, the company has been trying for the last three years to pay its shareholders the maximum possible dividend, which sometimes exceeds 100% earned net profit.

Fix Price. Retailer distributes profits on a semi-annual basis: for the first half of the year and the second. Target level of payments - not less 50% net profit under IFRS, but the de facto norm is 100% net profit amid low debt burden.

"Child's world". Children's goods store returns profits to shareholders twice a year: for 9 and 12 months. According to the dividend policy, the company must pay at least 50% net profit under IFRS, but management distributes more - 100% net profit under RAS.

"Ribbon". The retailer has never paid dividends in its history., but management intends to fix it. In November 2021, the company adopted a new dividend policy, which will distribute to 100% free cash flow.

"M Video". The company's dividend policy is focused on distribution 100% consolidated net profit under IFRS, provided, that "net debt / EBITDA" is less than 2.

"OK" - the retailer does not have a fixed profit distribution rate, therefore, each year the board of directors itself determines, what dividend the company will pay to its shareholders.

Обзор российских ретейлеров. Что выбрать розничному инвестору

Financial results

Russian retailers have shown double-digit growth rates over the past few years. The strongest dynamics among the presented companies is shown by Fix Price and Detsky Mir., and the weakest is "Ok" and "Lenta".

Обзор российских ретейлеров. Что выбрать розничному инвестору

Comparison by multipliers

EV / EBITDA P / E P / S Net debt / EBITDA
X5 Group 5,76 16,16 0,31 1,50
Magnet 7,41 13,99 0,39 1,92
Fix Price 17,64 28,95 2,49 0,68
Child's world 6,34 7,74 0,63 1,18
ribbon 4,79 7,98 0,24 1,69
M Video 6,29 8,21 0,24 2,33
OK 3,16 Otric. 0,07 2,32

What is the bottom line

Preference should be given to companies, that suit your investment style:

  1. If you are looking for the strongest business in Russian retail, then your favorite is X5 Group.
  2. If you are interested in big dividends, then choose between "M-video", "Magnet" and "Children's world".
  3. If you only invest in growth history, then it will suit you or Fix Price, or "Children's world".
  4. If you are a supporter of value investing, then your choice is "OK", "Ribbon", M-Video and H5 Group.
Scroll up