Daily analyst comments
Dixy Group: neutral operating results for 5M 2009
25.06.09 10:52
We view the 5M 2009 operating results from Dixy group as neutral. Although the lack of new store openings may have a negative impact on sales growth over time, this may be offset by the settlement of logistics network problems in the second half of the year.
Retail chain Dixy Group has reported its performance in the first five months of 2009. The posted ruble revenue growth of 17% has largely met expectations.
Table. Dixy Group: basic financials for 5M 2009
Source: company data, Finam estimates
We are neutral on the reported results. The lack of new store openings gives cause for concern. In January-May, the retailer shut down seven traditional-format stores and closed the entire chain of VMart stores. Given this, the company may find it difficult to meet its target of opening of 100 retail outlets this year. An intention by the company to settle all its logistics problems by this June, as earlier stated by management, gives us grounds to expect faster sales growth at the company in the second half of the year. According to management, the group is capable of achieving its targeted revenue growth of 20-25% towards the end of the year.
We remain upbeat on the company’s long-term prospects. Our estimates put the fair price for Dixy Group shares at USD 7 per share, which implies an upside potential of over 70% to the current stock valuations.