Magnit PJSC Debt jumped on 285% while EBITDA decreased on 2.9%
07 Feb 2019 • About Magnit PJSC (
$MGNT) • By InTwits
Magnit PJSC reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Magnit PJSC is a fast growth stock: 2018 revenue growth was 8.2%, 5 year revenue CAGR was 16.4% at 2018 ROIC 8.0%
- Magnit PJSC has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.6%. At the same time it's a lot of higher than industry average of 4.2%.
- CAPEX is quite volatile: ₹74,785m in FY2018, ₹77,156m in FY2017, ₹101,634m in FY2016, ₹134,924m in FY2015, ₹164,201m in FY2014
- The company has business model with low profitability: ROIC is 8.0%
- It operates with high leverage: Net Debt/EBITDA is 5.6x while industry average is 1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Magnit PJSC's Revenue increased on 8.2%. Revenue decline was accelerating on average at -6.6 pp per annum in 2014-2018. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 3.4 pp from 2.2% to 5.6% in 2018. EBITDA Margin stuck to a declining trend at -1.3 pp per annum in 2014-2018.
Gross Margin decreased on 2.7 pp from 26.6% to 24.0% in 2018. Gross Margin stuck to a declining trend at -1.2 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 2.0 pp from 19.3% to 17.3% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2017 at 19.3%.
Net Income margin showed almost no change in 2018. Net Income margin stuck to a declining trend at -1.0 pp per annum in the last 5 years. The efficient tax rate was 21.4% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 4.2%. CAPEX/Revenue decreased slightly on 1.5 pp from 5.7% in 2015 to 4.2% in 2018. It's average CAPEX/Revenue for the last three years was 5.1%. Magnit PJSC invested a large share of EBITDA (62.8%) to CAPEX.
Return on investment
The company operates at good ROE (14.2%) while ROIC is low (8.0%). ROIC decreased on 5.6 pp from 13.6% to 8.0% in 2018. ROE decreased slightly on 1.4 pp from 15.6% to 14.2% in 2018. ROIC declined at -6.9 pp per annum in 2014-2018. ROE stuck to a declining trend at -7.4 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 5.6x Net Debt / EBITDA and 5.9x Debt / EBITDA. Net Debt / EBITDA surged on 4.3x from 1.3x to 5.6x in 2018. Debt jumped on 285% while cash jumped on 45.9%. During 2014-2018 Net Debt/EBITDA bottomed in 2015 at 0.9x and was growing since that time.
Magnit PJSC has good short term financial stability: Interest coverage ratio (ICR) is 5.0x. Magnit PJSC has short term refinancing risk: cash is only 26.0% of short term debt.
Average interest expence charged on company's debt was 1.9% in 2018.
Valuation and dividends
Magnit PJSC's trades at EV/EBITDA 5.6x and P/E 0.0x.
The company paid 40.8% of Net Income as dividends in 2018.
Management team
Magnit PJSC's CFO Elena Milinova has spent 1 year with the company.
Financial and operational results
FY ended 31 Dec 2018
Magnit PJSC ($MGNT) key annual financial indicators| mln. RUB | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 767,556 | 955,100 | 1,074,812 | 1,143,314 | 1,237,015 | 8.2% |
| Gross Profit | 221,684 | 272,099 | 295,759 | 304,643 | 296,447 | -2.7% |
| SG&A | 135,111 | 168,616 | 192,996 | 221,013 | 214,319 | -3.0% |
| EBITDA | 86,867 | 103,978 | 103,507 | 84,620 | 82,128 | -2.9% |
| EBIT | | | | | 45,610 | |
| Interest expence | | | | | 9,136 | |
| Tax | | | | | 9,207 | |
| Net Income | 47,937 | 59,340 | 54,409 | 35,539 | 33,865 | -4.7% |
Balance Sheet
|
|---|
| Cash | 18,318 | 8,396 | 16,559 | 18,337 | 26,748 | 45.9% |
| Inventory | | | | | 187,779 | |
| Short Term Debt | 53,072 | 43,108 | 50,106 | 40,122 | 102,997 | 156.7% |
| Long Term Debt | 45,983 | 59,446 | 77,500 | 86,338 | 384,317 | 345.1% |
Cash flow
|
|---|
| Capex | 56,006 | 54,255 | 49,808 | 73,528 | 51,604 | -29.8% |
| Dividends | | | | | 13,809 | |
Ratios
|
|---|
| Revenue growth | 32.3% | 24.4% | 12.5% | 6.4% | 8.2% | |
| EBITDA growth | 36.6% | 19.7% | -0.5% | -18.2% | -2.9% | |
|
|---|
| Gross Margin | 28.9% | 28.5% | 27.5% | 26.6% | 24.0% | -2.7% |
| EBITDA Margin | 11.3% | 10.9% | 9.6% | 7.4% | 6.6% | -0.8% |
| EBIT Margin | | | | | 3.7% |
| SG&A, % of revenue | 17.6% | 17.7% | 18.0% | 19.3% | 17.3% | -2.0% |
| Net Income Margin | 6.2% | 6.2% | 5.1% | 3.1% | 2.7% | -0.4% |
| CAPEX, % of revenue | 7.3% | 5.7% | 4.6% | 6.4% | 4.2% | -2.3% |
|
|---|
| ROIC | 33.2% | 32.6% | 25.1% | 13.6% | 8.0% | -5.6% |
| ROE | 38.7% | 40.2% | 30.1% | 15.6% | 14.2% | -1.4% |
| Net Debt/EBITDA | 0.9x | 0.9x | 1.1x | 1.3x | 5.6x | 4.3x |
| Interest coverage ratio (ICR) | | | | | 5.0x |
| Interest expence / Average debt | | | | | 1.9% | |
Peers in Food & Drug Retailers
Below we provide Magnit PJSC 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| X5 Retail Group N.V ($89VS) | | 27.6% | 27.8% | 25.3% | |
| Crawshaw Group ($CRAW) | | 17.1% | 50.5% | 19.3% | 0.7% |
| Lenta Ltd ($LNTA) | 34.5% | 30.3% | 21.2% | 19.2% | |
| Total Produce ($TOT) | 1.1% | 7.8% | 8.0% | 18.3% | |
| Ocado Group ($OCDO) | | 16.7% | 14.8% | 14.4% | 9.9% |
| |
|---|
| Median (8 companies) | 1.1% | 7.8% | 8.0% | 16.4% | 5.3% |
|---|
| Magnit PJSC ($MGNT) | | 24.4% | 12.5% | 6.4% | 8.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crawshaw Group ($CRAW) | 43.8% | 44.4% | 45.1% | 43.5% | 42.0% |
| Ocado Group ($OCDO) | 33.0% | 33.9% | 34.2% | 34.0% | 34.2% |
| Dairy Farm International Hldgs ($DFIB) | 29.9% | 29.5% | 30.2% | 30.4% | |
| X5 Retail Group N.V ($89VS) | 24.5% | 24.5% | 24.2% | 23.9% | |
| Jardine Matheson Hldgs ($J36) | 23.4% | 23.3% | 23.8% | 23.8% | |
| |
|---|
| Median (8 companies) | 24.5% | 24.5% | 24.2% | 23.8% | 38.1% |
|---|
| Magnit PJSC ($MGNT) | 28.9% | 28.5% | 27.5% | 26.6% | 24.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Jardine Matheson Hldgs ($J36) | 11.8% | 12.8% | 18.3% | 23.5% | |
| Lenta Ltd ($LNTA) | 11.0% | 11.1% | 10.2% | 9.7% | |
| X5 Retail Group N.V ($89VS) | 7.7% | 7.2% | 7.0% | 7.4% | |
| Dairy Farm International Hldgs ($DFIB) | 6.6% | 5.8% | 6.0% | 5.2% | |
| Ocado Group ($OCDO) | 7.2% | 7.2% | 6.3% | 5.1% | 3.6% |
| |
|---|
| Median (8 companies) | 7.2% | 6.4% | 6.0% | 5.2% | -12.0% |
|---|
| Magnit PJSC ($MGNT) | 11.3% | 10.9% | 9.6% | 7.4% | 6.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ocado Group ($OCDO) | 5.6% | 6.4% | 6.7% | 9.0% | 7.1% |
| Lenta Ltd ($LNTA) | 17.9% | 12.3% | 13.8% | 7.5% | |
| Crawshaw Group ($CRAW) | 1.2% | 6.3% | 6.1% | 6.7% | 2.0% |
| X5 Retail Group N.V ($89VS) | 4.5% | 6.4% | 6.6% | 6.1% | |
| Jardine Matheson Hldgs ($J36) | 3.5% | 3.6% | 3.5% | 3.9% | |
| |
|---|
| Median (8 companies) | 3.5% | 5.1% | 3.9% | 5.0% | 4.5% |
|---|
| Magnit PJSC ($MGNT) | 7.3% | 5.7% | 4.6% | 6.4% | 4.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| X5 Retail Group N.V ($89VS) | 14.9% | 15.7% | 17.0% | 18.0% | |
| Lenta Ltd ($LNTA) | 24.5% | 20.3% | 16.0% | 14.4% | |
| Dairy Farm International Hldgs ($DFIB) | 31.1% | 21.6% | 18.7% | 13.4% | |
| Total Produce ($TOT) | 10.3% | 9.5% | 9.2% | 12.6% | |
| Jardine Matheson Hldgs ($J36) | 6.6% | 6.6% | 9.8% | 12.5% | |
| |
|---|
| Median (8 companies) | 10.3% | 9.5% | 9.2% | 12.6% | -47.9% |
|---|
| Magnit PJSC ($MGNT) | 33.2% | 32.6% | 25.1% | 13.6% | 8.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| O'Key Group Sa ($OKEY) | 2.4x | 2.6x | 3.1x | 3.2x | |
| Ocado Group ($OCDO) | 1.4x | 1.6x | 2.0x | 3.0x | -0.9x |
| Lenta Ltd ($LNTA) | 2.8x | 1.9x | 2.8x | 2.6x | |
| X5 Retail Group N.V ($89VS) | 2.2x | 2.3x | 1.9x | 1.7x | |
| Total Produce ($TOT) | 0.3x | 0.3x | 0.7x | 1.2x | |
| |
|---|
| Median (7 companies) | 1.4x | 1.5x | 1.4x | 1.7x | -0.9x |
|---|
| Magnit PJSC ($MGNT) | 0.9x | 0.9x | 1.1x | 1.3x | 5.6x |
