Investment Company FINAM renewed analytical coverage of shares of OAO magnet. The evaluation, 12-month target price of one ordinary share of the company at $ 44.7 with assignment recommendations Hold. Magnet is one of the largest and most dynamically developing retail networks, which even during the crisis period continues to show high rates of sales growth, improving business efficiency and increase profitability.
As a result of the deteriorating macroeconomic situation in Russia the rate of growth of retail trade in ruble terms, can be reduced by more than half, predicts analyst IK FINAM Sergey Philchenkov: In this sector of food retail, in our view, looks more vulnerable because of reliance on meet the primary needs of the population, as well as the low penetration of modern retail formats in Russia (about 35-40% of the total market). He notes that massive segments more resistant to the crisis through a flexible pricing policy. According to estimates by Mr. Filchenkova, in current circumstances, grocery retailers, developing affordable discount and hypermarket formats, be able to achieve relatively high growth of sales.
This business model magnet demonstrates the high efficiency. The dominant format of the trading network - walking access to shops - proved to be very viable in terms of reducing consumer spending. Magnet , one of the few retailers to the public, did not experience a substantial reduction of the dynamics of sales in the first months of 2009, - said Mr. Philchenkov . Moreover, the network demonstrates a high rate of growth of revenues. During the first half of the sale of magnets have increased by more than 32% in ruble terms, ahead of major competitors in the market.
retailer also shows the growth rate of discovery of the outlets. Despite the decline in capital expenditures in 2009 (projected at 15 billion rubles), Magnet for the first 6 months more than doubled the pace of opening new outlets - said Mr. Philchenkov. - We appreciate the plans to open about 400 shops, on the basis of 2009 as it is achievable.
Strict control of costs and optimization of logistics systems allow magnet to record levels on the growth of profitability. The forecast management to achieve by the end of 2009 EBITDA profitability in 8-8,5%, we think it is realistic, - says the study FINAM. Debt load magnet is one of the lowest in the sector (the ratio of net debt to EBITDA 2008 at 0.7) that allows the company to easily raise funds for the implementation of the investment program. The absence of a credit portfolio of foreign currency debt to minimize the risk of exchange losses as a result of the devaluation of the currency.
Despite the attractive features of the business, Magnet - a rather expensive asset. Because in the beginning of the year, discounts on company-analogues of developed and developing countries at the level of 30-50% at the moment disappeared, and some retail companies traded expensive western counterparts. We believe that this is food retail in general, with coefficients EV /EBITDA 2009 at the level of 8.2 is already fairly assessed. The same applies to the magnet in the price of which has already been taken into account the potential growth of the network and its financial performance, - said Mr. Philchenkov.
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