The numbers tell that X5 Retail Group N.V is a solid growth stock

28 Mar 2016 • About X5 Retail Group N.V ($89VS) • By InTwits

X5 Retail Group N.V is a fast-growing stock in Food & Drug Retailers industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

X5 Retail Group N.V showed fast growth in the last financial year. X5 Retail Group N.V's revenue surged on 27.6% in FY2015. In addition to revenue X5 Retail Group N.V also keeps delivering EBITDA growth. It was 19.7% in FY2015

In the last 3 years the company showed fast revenue growth of 18.1% from 2012 to 2015 annually. EBITDA surged on 19.6% from 2012 to 2015 annually.

X5 Retail Group N.V ($89VS) financials for the last 5 years

mln. RUB	2011	2012	2013	2014	2015
Revenue	454,367	490,655	534,836	633,873	808,818
Revenue growth, %		8.0%	9.0%	18.5%	27.6%
Gross margin, %	23.8%	23.6%	24.4%	24.5%	24.5%
SG&A, %			20.7%	21.1%	21.0%
EBITDA	33,228	33,908	37,971	48,520	58,065
EBITDA growth, %		2.0%	12.0%	27.8%	19.7%
EBITDA margin, %	7.31%	6.91%	7.10%	7.65%	7.18%
Net Income	8,862	-3,929	10,990	12,691	14,174
Net Income margin, %	1.95%	-0.801%	2.05%	2.00%	1.75%

CAPEX	23,283	22,511	20,333	28,260	51,605
CAPEX/Revenue, %	5.12%	4.59%	3.80%	4.46%	6.38%
Debt	116,087	123,108	111,084	130,986	144,215
Cash	12,368	12,464	7,650	25,623	8,958
Net Debt/EBITDA	3.1x	3.3x	2.7x	2.2x	2.3x

ROIC, %	11.9%	3.1%	13.0%	14.9%	15.7%
ROE, %	14.2%	-5.8%	15.1%	15.0%	14.5%

Profitability and return on investment

EBITDA margin declined slightly from 7.70% in FY2014 to 7.20% in FY2015. In the last 3 years the company showed small growth in EBITDA margin of 0.300 pp from 6.90% in 2012 to 7.20% in 2015.

We call X5 Retail Group N.V an attractive growth stock as together with the growth it delivers high ROIC at 15.7%. Three years ago it was considerably lower at 3.10%. Average ROIC for the last three years was 14.5%.

Net Income margin dropped on 0.200 pp from 2% to 1.80% in 2015. If we look for the longer period the company showed fast Net Income margin growth of 2.60 pp from -0.800% in 2012 to 1.80% in 2015.

X5 Retail Group N.V operates at ROE of 14.5%. Average ROE for the last three years was 14.9%.

Capital expenditures (CAPEX)

To fuel this fast growth the company had to invest in CAPEX.X5 Retail Group N.V's CAPEX/Revenue was 6.38% in FY2015. X5 Retail Group N.V's CAPEX/Revenue surged on 1.79 pp from 4.59% in 2012 to 6.38% in 2015. Average CAPEX/Revenue for the last three years was 4.88%.

Leverage (Debt)

X5 Retail Group N.V has medium debt level at 2.3x Net Debt/EBITDA to maintain high growth. In the longer period X5 Retail Group N.V's leverage dropped on 0.93x from 3.26x in 2012 to 2.33x in 2015.

Peers in Food & Drug Retailers

Below we provide X5 Retail Group N.V benchmarking against other companies in Food & Drug Retailers industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5
	FY2011	FY2012	FY2013	FY2014	FY2015
Lenta Ltd ($LNTA)		22.4%	31.3%	34.5%	30.3%
Magnit PJSC ($MGNT)		33.5%	29.4%	32.3%	24.4%
Crawshaw Group ($CRAW)		-0.9%	-0.6%	11.9%	17.1%
Total Produce ($TOT)		6.4%	8.5%	1.1%	7.8%
Dairy Farm International Hldgs ($DFIB)		7.3%	5.7%	6.3%	1.2%

Median (7 companies)	12.7%	14.9%	7.1%	7.6%	7.8%
X5 Retail Group N.V ($89VS)		8.0%	9.0%	18.5%	27.6%

Top companies by Gross margin, %

Top 5
	FY2011	FY2012	FY2013	FY2014	FY2015
Snacktime ($SNAK)	55.0%	56.6%	51.8%	55.1%	53.9%
Crawshaw Group ($CRAW)	43.6%	43.3%	43.7%	43.8%	44.4%
Dairy Farm International Hldgs ($DFIB)	29.4%	28.9%	29.8%	29.9%	29.5%
Magnit PJSC ($MGNT)	24.3%	26.5%	28.5%	28.9%	28.5%
Jardine Matheson Hldgs ($J36)	22.6%	22.4%	22.3%	23.4%	23.3%

Median (7 companies)	23.6%	25.0%	26.2%	26.7%	28.5%
X5 Retail Group N.V ($89VS)	23.8%	23.6%	24.4%	24.5%	24.5%

Top companies by EBITDA margin, %

Top 5
	FY2011	FY2012	FY2013	FY2014	FY2015
Jardine Matheson Hldgs ($J36)	24.4%	13.1%	11.6%	11.8%	12.8%
Lenta Ltd ($LNTA)	9.3%	10.7%	11.2%	11.0%	11.1%
Magnit PJSC ($MGNT)	7.8%	10.3%	11.0%	11.3%	10.9%
Crawshaw Group ($CRAW)	5.4%	3.7%	3.4%	6.5%	6.4%
Dairy Farm International Hldgs ($DFIB)	7.6%	6.6%	6.9%	6.6%	5.8%

Median (7 companies)	7.9%	7.3%	7.1%	6.9%	6.4%
X5 Retail Group N.V ($89VS)	7.3%	6.9%	7.1%	7.7%	7.2%

Top companies by CAPEX/Revenue, %

Top 5
	FY2011	FY2012	FY2013	FY2014	FY2015
Lenta Ltd ($LNTA)	4.4%	13.4%	16.2%	17.9%	12.3%
Crawshaw Group ($CRAW)	3.6%	1.1%	1.0%	1.2%	6.3%
Magnit PJSC ($MGNT)	14.5%	10.5%	8.6%	7.3%	5.7%
Jardine Matheson Hldgs ($J36)	3.6%	4.9%	4.4%	3.5%	3.6%
Snacktime ($SNAK)	2.6%	5.3%	4.3%	3.4%	2.5%

Median (7 companies)	3.6%	5.1%	4.3%	3.4%	3.6%
X5 Retail Group N.V ($89VS)	5.1%	4.6%	3.8%	4.5%	6.4%

Top companies by ROIC, %

Top 5
	FY2011	FY2012	FY2013	FY2014	FY2015
Magnit PJSC ($MGNT)	17.9%	23.1%	26.0%	33.2%	32.6%
Dairy Farm International Hldgs ($DFIB)	39.6%	32.8%	34.6%	31.1%	21.6%
Lenta Ltd ($LNTA)	44.1%	42.9%	34.0%	24.5%	20.3%
Total Produce ($TOT)	8.8%	9.0%	11.9%	10.3%	9.5%
Crawshaw Group ($CRAW)	5.5%	1.2%	2.1%	8.6%	7.1%

Median (7 companies)	18.1%	16.1%	16.8%	13.7%	9.5%
X5 Retail Group N.V ($89VS)	11.9%	3.1%	13.0%	14.9%	15.7%

Top companies by Net Debt / EBITDA

Top 5
	FY2011	FY2012	FY2013	FY2014	FY2015
Snacktime ($SNAK)	0.8x	2.0x	6.0x	4.4x
Lenta Ltd ($LNTA)	2.4x	2.2x	2.5x	2.8x	1.9x
O'Key Group Sa ($OKEY)	1.2x	1.0x	1.3x	2.4x
Jardine Matheson Hldgs ($J36)	0.6x	1.4x	1.3x	1.3x	1.3x
Magnit PJSC ($MGNT)	1.3x	1.1x	1.1x	0.9x	0.9x

Median (8 companies)	1.0x	1.0x	1.2x	1.1x	0.8x
X5 Retail Group N.V ($89VS)	3.1x	3.3x	2.7x	2.2x	2.3x

X5 Retail Group N.V stock price chart

X5 Retail Group N.V financials

mln.	FY2010	FY2011	FY2012

Revenue	342,588	454,367	490,655
EBITDA	25,620	33,228	33,908
Net income	8,251	8,862	-3,929.430
CAPEX	11,120	23,283	22,511
Debt	112,650	116,087	123,108
Cash	8,268	12,368	12,464

About X5 Retail Group N.V

X5 Retail Group N.V. develops and operates grocery retail stores primarily in the Russian Federation. It operates proximity stores chain under the Pyaterochka brand, supermarket chain under the Perekrestok brand, hypermarket chain under the Karusel brand, and convenience stores under the Perekrestok Express brand, as well as operates soft discounter stores in the Samara region of the Russian Federation, as well as provides franchise services. As of December 31, 2014, the company had 5,483 company-operated stores, including 4,789 Pyaterochka proximity stores; 403 Perekrestok supermarkets; 82 Karusel hypermarkets; and 209 Perekrestok Express convenience stores, as well as operated 312 stores by franchise partners. X5 Retail Group N.V. was founded in 1975 and is based in Moscow, the Russian Federation.