Looking for growth stocks? Pay attention to X5 Retail Group N.V

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

X5 Retail Group N.V is an attractive growth stock in Food & Drug Retailers industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story

X5 Retail Group N.V showed fast growth in the last financial year. The company's revenue surged on 27.8% in FY2016. Together with revenue growth X5 Retail Group N.V also managed to keep EBITDA growth. EBITDA grew 31.3% for the same period.

In the longer period X5 Retail Group N.V showed fast revenue growth of 24.6% from 2013 to 2016 annually. EBITDA surged on 26.2% from 2013 to 2016 annually.

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

mln. RUB	2012	2013	2014	2015	2016
Revenue	490,655	534,836	633,873	808,818	1,033,667
Revenue growth, %		9.0%	18.5%	27.6%	27.8%
Gross margin, %	23.6%	24.4%	24.5%	24.5%	24.2%
SG&A, %		20.7%	21.1%	21.0%	20.4%
EBITDA	33,908	37,971	48,520	58,065	76,267
EBITDA growth, %		12.0%	27.8%	19.7%	31.3%
EBITDA margin, %	6.91%	7.10%	7.65%	7.18%	7.38%
Net Income	-3,929	10,990	12,691	14,174	22,291
Net Income margin, %	-0.801%	2.05%	2.00%	1.75%	2.16%

CAPEX	22,511	20,333	28,260	51,605	68,694
CAPEX/Revenue, %	4.59%	3.80%	4.46%	6.38%	6.65%
Debt	123,108	111,084	130,986	144,215	156,033
Cash	12,464	7,650	25,623	8,958	18,190
Net Debt/EBITDA	3.3x	2.7x	2.2x	2.3x	1.8x

ROIC, %	3.1%	13.0%	14.9%	15.7%	17.0%
ROE, %	-5.8%	15.1%	15.0%	14.5%	19.2%

Profitability and return on investment

EBITDA growth was partly attributed to margin expansion. EBITDA margin increased slightly on 0.200 pp from 7.20% to 7.40% in 2016. In the last 3 years EBITDA margin increased slightly on 0.300 pp from 7.10% in 2013 to 7.40% in 2016.

We call X5 Retail Group N.V an attractive growth stock as together with the growth it delivers high ROIC at 17.0%. During the last three years it surged - it was 13.0% in FY2013. Average ROIC for the last three years was 15.8%.

Net Income margin surged on 0.400 pp from 1.80% to 2.20% in 2016. If we look for the longer period Net Income margin increased slightly on 0.1000 pp from 2.10% in 2013 to 2.20% in 2016.

X5 Retail Group N.V operates at ROE of 19.2%. Average ROE for the last three years was 16.3%.

Capital expenditures (CAPEX)

To this fast growth the company had to invest in CAPEX.In FY2016 the company had CAPEX/Revenue of 6.65%. X5 Retail Group N.V showed fast CAPEX/Revenue growth of 2.84 pp from 3.80% in 2013 to 6.65% in 2016. It's average level of CAPEX/Revenue for the last three years was 5.83%.

Leverage (Debt)

Having such a fast growth profile X5 Retail Group N.V keeps medium debt level at 1.8x Net Debt/EBITDA. In the longer period leverage dropped on 0.92x from 2.72x in 2013 to 1.81x in 2016.

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
	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.