X5 Retail Group N.V reports 33.1% CAPEX growth and 27.8% Revenue growth

27 Mar 2017 • About X5 Retail Group N.V ($89VS) • By InTwits

X5 Retail Group N.V reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

X5 Retail Group N.V is a fast growth stock: 2016 revenue growth was 27.8%, 5 year revenue CAGR was 17.9% at 2016 ROIC 17.0%
EBITDA Margin is relatively stable: 7.4% in 2016 vs. 7.2% in 2015 vs. 6.9% in 2012
X5 Retail Group N.V has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.2%. At the same time it's in pair with industry average of 5.2%.
CAPEX is quite volatile: 68,694 in 2016, 51,605 in 2015, 28,260 in 2014, 20,333 in 2013, 22,511 in 2012
The company has highly profitable business model: ROIC is at 17.0%
It operates with high leverage: Net Debt/EBITDA is 1.8x while industry average is 0.2x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

X5 Retail Group N.V ($89VS) key annual financial indicators

mln. RUB	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	490,655	534,836	633,873	808,818	1,033,667	27.8%
Gross Profit	115,686	130,415	154,982	198,390	249,985	26.0%
SG&A		110,814	133,512	170,065	211,314	24.3%
EBITDA	33,908	37,971	48,520	58,065	76,267	31.3%
Net Income	-3,929	10,990	12,691	14,174	22,291	57.3%
Balance Sheet
Cash	12,464	7,650	25,623	8,958	18,190	103.1%
Short Term Debt	51,405	30,838	15,834	42,670	45,168	5.9%
Long Term Debt	71,703	80,246	115,152	101,545	110,865	9.2%
Cash flow
Capex	22,511	20,333	28,260	51,605	68,694	33.1%
Ratios
Revenue growth	8.0%	9.0%	18.5%	27.6%	27.8%
EBITDA growth	2.0%	12.0%	27.8%	19.7%	31.3%
Gross Margin	23.6%	24.4%	24.5%	24.5%	24.2%	-0.3%
EBITDA Margin	6.9%	7.1%	7.7%	7.2%	7.4%	0.2%
Net Income Margin	-0.8%	2.1%	2.0%	1.8%	2.2%	0.4%
SG&A, % of revenue		20.7%	21.1%	21.0%	20.4%	-0.6%
CAPEX, % of revenue	4.6%	3.8%	4.5%	6.4%	6.6%	0.3%
ROIC	3.1%	13.0%	14.9%	15.7%	17.0%	1.3%
ROE	-5.8%	15.1%	15.0%	14.5%	19.2%	4.7%
Net Debt/EBITDA	3.3x	2.7x	2.2x	2.3x	1.8x	-0.5x

Revenue and profitability

The company's Revenue jumped on 27.8% in 2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.0 pp from 8.6% to 9.6% in 2016.

Gross Margin showed almost no change in 2016. SG&A as a % of Revenue decreased slightly on 0.58 pp from 21.0% to 20.4% in 2016.

Net Income marign showed almost no change in 2016.

Capital expenditures (CAPEX) and working capital investments

In 2016 X5 Retail Group N.V had CAPEX/Revenue of 6.6%. The company showed CAPEX/Revenue growth of 2.8 pp from 3.8% in 2013 to 6.6% in 2016. It's average level of CAPEX/Revenue for the last three years was 5.8%.To maintain this fast growth X5 Retail Group N.V invested a large share of EBITDA (90.1%) to CAPEX.

Return on investment

The company operates at good ROIC (16.98%) and ROE (19.24%). ROIC increased slightly on 1.3 pp from 15.7% to 17.0% in 2016. ROE increased on 4.7 pp from 14.5% to 19.2% in 2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 2.0x. Net Debt / EBITDA dropped on 0.5x from 2.3x to 1.8x in 2016. Debt increased on 8.2% in 2016 while cash jumped on 103% in 2016.

Appendix 1: Peers in Food & Drug Retailers

Below you can find X5 Retail Group N.V benchmarking vs. other companies in Food & Drug Retailers industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Crawshaw Group ($CRAW)		-0.6%	11.9%	17.1%	50.5%
Lenta Ltd ($LNTA)		31.3%	34.5%	30.3%	21.2%
Magnit PJSC ($MGNT)		29.4%	32.3%	24.4%	12.5%
Total Produce ($TOT)		8.5%	1.1%	7.8%	8.0%
Dairy Farm International Hldgs ($DFIB)		5.7%	6.3%	1.2%	0.6%
Median (7 companies)	26.0%	7.1%	7.6%	7.4%	8.0%
X5 Retail Group N.V ($89VS)		9.0%	18.5%	27.6%	27.8%

Top companies by Gross margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Snacktime ($SNAK)	56.6%	51.8%	55.1%	53.9%	54.0%
Crawshaw Group ($CRAW)	43.3%	43.7%	43.8%	44.4%	45.1%
Dairy Farm International Hldgs ($DFIB)	28.9%	29.8%	29.9%	29.5%	30.2%
Magnit PJSC ($MGNT)	26.5%	28.5%	28.9%	28.5%	27.5%
Jardine Matheson Hldgs ($J36)	22.4%	22.3%	23.4%	23.3%	23.8%
Median (7 companies)	25.0%	26.2%	26.7%	26.0%	27.5%
X5 Retail Group N.V ($89VS)	23.6%	24.4%	24.5%	24.5%	24.2%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Jardine Matheson Hldgs ($J36)	13.1%	11.6%	11.8%	12.8%	18.2%
Lenta Ltd ($LNTA)	10.7%	11.2%	11.0%	11.1%	10.2%
Magnit PJSC ($MGNT)	10.3%	11.0%	11.3%	10.9%	9.6%
Dairy Farm International Hldgs ($DFIB)	6.6%	6.9%	6.6%	5.8%	6.0%
Total Produce ($TOT)	2.4%	2.6%	2.4%	2.2%	2.3%
Median (7 companies)	7.3%	7.1%	6.9%	6.2%	6.0%
X5 Retail Group N.V ($89VS)	6.9%	7.1%	7.7%	7.2%	7.4%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Lenta Ltd ($LNTA)	13.4%	16.2%	17.9%	12.3%	13.8%
Crawshaw Group ($CRAW)	1.1%	1.0%	1.2%	6.3%	6.1%
Magnit PJSC ($MGNT)	10.5%	8.6%	7.3%	5.7%	4.6%
Snacktime ($SNAK)	5.3%	4.3%	3.4%	2.5%	3.9%
Jardine Matheson Hldgs ($J36)	4.9%	4.4%	3.5%	3.6%	3.5%
Median (7 companies)	5.1%	4.3%	3.4%	4.4%	3.9%
X5 Retail Group N.V ($89VS)	4.6%	3.8%	4.5%	6.4%	6.6%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Magnit PJSC ($MGNT)	23.1%	26.0%	33.2%	32.6%	25.1%
Dairy Farm International Hldgs ($DFIB)	32.8%	34.6%	31.1%	21.6%	18.5%
Lenta Ltd ($LNTA)	42.9%	34.0%	24.5%	20.3%	16.0%
Jardine Matheson Hldgs ($J36)	7.9%	6.4%	6.6%	6.6%	9.8%
Total Produce ($TOT)	9.0%	11.9%	10.3%	9.5%	9.2%
Median (7 companies)	16.1%	16.8%	13.7%	10.0%	9.8%
X5 Retail Group N.V ($89VS)	3.1%	13.0%	14.9%	15.7%	17.0%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Lenta Ltd ($LNTA)	2.2x	2.5x	2.8x	1.9x	2.8x
Magnit PJSC ($MGNT)	1.1x	1.1x	0.9x	0.9x	1.1x
Dairy Farm International Hldgs ($DFIB)	-0.8x	-0.9x	-0.7x	0.7x	1.0x
Jardine Matheson Hldgs ($J36)	1.4x	1.3x	1.3x	1.3x	0.8x
Total Produce ($TOT)	1.0x	0.2x	0.3x	0.3x	0.7x
Median (6 companies)	1.0x	1.2x	1.1x	0.9x	0.9x
X5 Retail Group N.V ($89VS)	3.3x	2.7x	2.2x	2.3x	1.8x

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.