DOCSLIB.ORG

Russia – May 2019 We Have Spent a Few Days in Moscow to Check on Domestic Consumer Shape and Preferences

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Russia – May 2019 We Have Spent a Few Days in Moscow to Check on Domestic Consumer Shape and Preferences TRAVEL BOOK GemEquity Investing in Emerging Markets equity July 2018 –1H18 results, first impressions distributed or passed on to third parties in whole or in part without the prior written authorisation of Gemway Assets SAS. GemEquity is primarily invested in equities and presents a risk of capital loss. This document is not of a contractual nature. It may not be reproduced, Travel book: Russia – May 2019 We have spent a few days in Moscow to check on domestic consumer shape and preferences. In general trade we met with management teams of X5 Retail, Magnit, Lenta, Detsky Mir among the listed players and Vkusvill and Fix Price for the ones expected to list by 2020. In internet we met Yandex, Mail, Qiwi (listed), Ozon and Rambler (private). Russian household spending has been subdued. Their purchasing power has not expanded since 2014. Nevertheless, the economy has been transformed and modernized, despite the implementation of sanctions. Since the World Football Cup Moscow has been offered a new face: historical buildings were restored and repainted. Tourists are walking in masses. Central streets are full of restaurants of all kind. Old manufacturing facilities and warehouses turned into western style food markets. Public transportation has been modernized. Sanctions are still there but the economy got accustomed somehow. Macro focus: when redistribution will happen? denominated debt. However, the risk of additional sanctions remains an overhang for the sentiment and the currency. Russian economy has been driven by investment while consumer has seen its purchasing power in real terms falling GDP growth accelerating (cf. the chart below). And recent cost increases have been adding pressure: 200bps jump in VAT (to 20%) in January 2019, doubling of utility charges (property, waste treatment) and implementation of a painful pension reform last year. Available household income: under pressure Source : Sberbank CIB Sector focus : retail. Companies: VkusVill : CA $1.3 bn, private ; X5 : sales $27 bn, market capitalization $8 bn Source : Sberbank CIB, 100 base in 2003 « What does not kill you makes you stronger », used to say F. Nietzsche. This metaphor perfectly describes food retail Meanwhile, the export driven sector is performing well: sector in Russia now. When in 2014 sanctions hit the mar- trade balance surpassed before crisis levels, ie US$194bn in 2018 vs. US$90bn in 2016. Following the implementation thenket, retail strong shelves localization turned efforts empty were and done. inflation This timeskyrocketed. we were their pockets: $177bn expected by year end and $220bn positivelyAt first it was surprised replaced by withthe abundance poor quality of productsfresh products but since on of fiscal rule in 2016, Russian sovereign funds refilled in 2020 (vs. $65bn in 2017). Ruble has stabilized and the shelves. Also new players have appeared in the space, like Vkusvill (The taste form the Farm). It is a 820 stores low and has been revised down recently to 4.5% in 2019 food retail chain with the following value proposition: fresh decorrelated somewhat from oil prices. Inflation remains (to compare with 5-5.5% target announced by Central products directly from the farmers to consumers. Stores are Bank in January). Real rates are high and hence the 7.75% mostly located in Moscow (1.7% market share) and private interest rate has scope to be lowered at least 50bps in 2019. label covers 95% of the assortment. The journey started as a In 1Q19 the economy only expanded by 0.5% yoy but as the small dairy products chain by a young entrepreneur Andrey infrastructure program unwidens, it is expected to accelerate Krivenko back in 2009. In 2012 he decided to expand into going forward. Fiscal budget is set at $277bn, or 16.5% of GDP. a multi-category store, but fresh is still predominant. Over Foreign investors’ appetite for Russia assets recovered: in April 50% of delivered products are consumed the same day. Lo- the government managed to raise $2.8bn in local currency gistics are key. And the marketing concept is also outstan- Gemway Assets - 10 rue de la Paix 75002 Paris, France - French management company registered on 18/09/2012 under number GP-12000025 Contacts : Michel Audeban +331 86 95 22 98 / +336 85 83 26 73 - Pierre Lorre +331 84 25 62 54 - [email protected] TRAVEL BOOK GemEquity Investing in Emerging Markets equity July 2018 –1H18 results, first impressions ding: clients are invited to vote on a basket of purchased pro- Revolution is also happening ducts and get a personalized promotion afterwards. It is all on roads. We already done through a mobile application. This process empowers mentioned here Yandex (cf clients to sort suppliers. The company adjusts its sourcing monthly report from March partners according to 2019). It is the leading their ranking. Private search portal in Russia and - favorite destination for local tok holds 12% of capi- advertisers. But the new tal,equity the fund founder Baring 68%Vos ambition of its founder Arkady Volozh is to become the leading and the rest of mana- transportation solution in Russia. Last May during a press gement 20% (average conference, he reached the scene in a self-driven car powered age is 35). Baring Vos- by internally developed software system. Simultaneously the tok partners are plan- company promoted Yandex Taxi CEO Tigran Khudaverdyan ning an IPO in 2H20. to a newly created position of general vice director of The company generates $1.3 bn in sales, EBITDA margin of Yandex group. It highlights where the focus is. The company 8% and could be valued at $1 bn (if we apply X5 Retail’s EV/ plans to pilot hundred self-driven cars in Moscow in 2019. EBITDA multiple of 9x). The management expects to reach 3,000 stores in 5 years going into St Petersburg and some other big cities. However, competitors remain sceptical. Yandex Taxi and Yandex Drive (car sharing) are changing Indeed, food retail sector ($250 bn in size) is already customers habits: safety, mature in Russia : 70% of the market is modern retail. The cost, comfort. The traf- leader, X5 Retail is commanding 11% market share with 16,000 stores (15,000 proximity, 770 super and 91 distances are long and hyper). It is followed by Magnit with 7.7%. Both continue centralfic is dense,city parking travelled is to consolidate the market adding 2,000 stores a year expensive. So why ca- each. The rapid rise of VkusVill surprised them because it ring its own car? Yandex proved that they were wrong. First some consumers are commands 80% market share in Moscow after (20-30% higher price on average). Second, promotional merging with Uber. Competitors, such as Mail.ru, are trying ready to pay a premium for higher quality fresh products to grab some share but the brand and Yandex ecosystem are tags on the shelves. Third, private label works in Russia. powerful. For example, while travelling in the beautiful mus- activity can be more efficient when targeted vs yellow New management team at X5 recognized their past mistakes. covite underground, we noticed digital screens powered by They now target to increase the portion of private label to Yandex browser in new trains. There, we also crossed a de- 20% in 3-5 years from 5% currently. Employee turnover livery man from Delivery Club (left side picture), Mail’s sub- rate and their satisfaction became part of top management sidiary. It is another domain where the two leading internet companies Demyashkevitch, CFO, is also more enthusiastic about are disrupting consumers’ habits. The theKPIs. omni-channel The quality opportunity.of service isThe now company a priority. has Svetlanainvested difference is that Mail.ru paid $100M massively in technology and is today the best positioned to in 2016 for a company that operated in capture the trend. They are testing home delivery from their - supermarkets. Proximity stores have turned into pick up cow. Yandex bought Foodfox in 2017 points for e-commerce delivery. Internet is revolutionizing fora quasi-monopolistic $8.4M and since then situation changed in Mos the Russian consumers’ habits and is growing exponentially. brand to Yandex Food. As per Yandex Local leading multicategory e-commerce player OZON has COO/CFO Greg Abovski, Yandex is now been growing its value of new business 80% pa. n°1 in Moscow. Both companies are lo- sing money in food delivery. Mail.ru has been focusing on its Sector focus: Internet revolution in Russia. Yandex: gaming portfolio. Yandex has been working on expanding and $2.7bn revenue, $12.7bn market capitalization, empowering its ecosystem: speakers, smart TV, music, video 1.5% of GemEquity; Mail.ru: $1bn revenue, $5.2bn and all sort of other content. The idea is to increase the fre- market capitalization Past performances do not guarantee future performances. They must not be thequency central of elementinteraction of the with subscriber’s consumers. investment decision: the other elements appearing on the management reports associated with the UCITS and the risks to which the fund is exposed must be taken into consideration. For more information, please refer to the KIID or consult your usual contact. Management fees are included in the performance. In Switzerland, the Fund has appointed as Swiss Representative Oligo Swiss Fund Services SA, Av. Villamont 17, 1005 Lausanne, Switzerland, Tel: +41 21 311 17 77, email: performance and jurisdiction is Lausanne. [email protected]. The Fund’s paying agent is Banque Cantonale de Genève. In respect of the Shares distributed in or from Switzerland, the place of Gemway Assets - 10 rue de la Paix 75002 Paris, France - French management company registered on 18/09/2012 under number GP-12000025 Contacts : Michel Audeban +331 86 95 22 98 / +336 85 83 26 73 - Pierre Lorre +331 84 25 62 54 - [email protected].
Load more

Recommended publications
  • Yandex : Un Système Tentaculaire
    SOMMAIRE Sommaire ................................................................................................................................................ 2 Executive summary ................................................................................................................................. 3 Introduction ............................................................................................................................................. 4 I. La genèse de Yandex : un système tentaculaire ............................................................................. 8 A. État des lieux et historique du développement des filiales ........................................................ 8 1. Multiplicité et disparité entre les branches ........................................................................ 8 2. Une capacité d’expérimentation comme source d’expansion .......................................... 11 B. Le projet de diversification de Yandex ...................................................................................... 11 1. Le lancement de nouvelles filiales ..................................................................................... 11 2. Les effets de la Covid-19 comme catalyseur des filières numériques............................... 13 C. La nébuleuse Yandex : capitalisation, actionnariat, gouvernance et partenariats ................... 15 1. Capitalisation et résultats financiers ................................................................................. 15 2. La stratégie
    [Show full text]
  • YANDEX Análisis De Inversión
    YANDEX Análisis de inversión 10 diciembre 2019 C/ Colón, 4 - 5B · 46004 Valencia · Tel. 961 237 015 · [email protected] - www.zonavalue.com YNDX: NASDAQ El Google ruso que se encuentra infravalorado Yandex es una compañía que cotiza con un El riesgo político es una realidad, pero que es marketcap de $ 13.8 Billones, con una serie de dudoso que Putin y sus aliados puedan hacer algo subdivisiones de compañías de alta tecnología, que para poner en un riesgo serio el desempeño de la ofrecen una apuesta sobre un número elevado de compañía. negocios con gran potencial. Considero las acciones actualmente cotizan con un Los ingresos operativos han estado en una margen de seguridad mayor al 35%, siendo que su tendencia alcista constante, creciendo de 9.5 precio se encuentra entorno a los $40 por acción, y Billones de rublos rusos en 2015, a 20.8 billones debería cotizar entorno a los $60. RUB en 2018, es decir, un 21.6% CAGR (crecimiento anual compuesto). Yandex recientemente presentó unos crecimientos aún mayores en el 3T 2019; con incrementos de 39.3% en ventas, y 48.0% en ingresos por operaciones. Ilya Segalovich y Arkady Volozh Yandex es una compañía de tecnología rusa con operaciones análogas a Alphabet. Si bien no es muy conocida fuera de Rusia, esta compañía no es una la típica tecnológica que es una máquina de quemar dinero. Yandex emplea aproximadamente 9.500 personas, reportó ventas en 2018 de $ 1.8 mil millones, con unos beneficios netos de $ 660.1 millones, teniendo una capitalización de mercado de aproximadamente $ 13.8 mil millones.
    [Show full text]
  • 12 September 2018 Arkady Volozh Chief Executive Officer Yandex N.V
    12 September 2018 Arkady Volozh Chief Executive Officer Yandex N.V. Ulitsa Lva Tolstogo 16, Moscow, Russia 119021 Dear Mr. Volozh: Access Now is a global organization fighting to defend and extend human rights in the digital age, particularly for users most at risk. We are writing to draw your attention to your company’s performance in the 2018 Ranking Digital Rights Corporate Accountability Index and to invite you to ​ ​ offer a public response. As you may be aware, the Index evaluated 22 of the world’s leading internet, mobile, and telecommunications companies, including yours, and found that all companies could make significant improvements in disclosing policies and commitments that affect their users’ rights to freedom of expression and privacy. Yandex’s score was based on an evaluation of its disclosed policies for its Yandex Mail, Yandex Search, and Yandex Disk services. Yandex ranked ninth out of 12 companies in its category, and saw no change in its Index score from 2017. The company did not make substantive improvements or disclose sufficient information about Yandex’s policies affecting users’ human rights. Although the company does not face any legal impediments for making a public commitment to respect users’ human rights, the company has failed to do so. Further, the 2018 Index results demonstrated a serious lack of transparency on issues related to users’ privacy. Yandex provided very little information about users’ ability to control whether their information is used for targeted advertising. The company did not disclose whether and how it tracks users across the internet nor whether users may access the information that the company holds about them.
    [Show full text]
  • By Esther Dyson
    ® ESTHER DYSON’S MONTHLY REPORT Release 1.0 VOLUME 23, NO. 3 | MARCH 2005 | www.release1-0.com The World Wide World: IT Ain’t Just the Web Anymore! INSIDE BY ESTHER DYSON THE WWW: IT AIN’T JUST THE WEB ANYMORE! This year, we wanted PC Forum to recognize the IT industry’s contin- The World Wide World 3 ually closer connection with the real world – with non-techies, with Gardner, Stern, Yang non-Americans, with the pleasures and pains of real life. We’re proud Tales From the Worldwide Trenches 8 to say we have achieved that, with speakers ranging from labor leader Mulcahy, J. Schwartz, Ward You Talkin' to Me? 13 Andy Stern to Russia’s Arkady Volozh, and topics ranging from health Charney, Thompson, Ullal care to the exotic reaches of new search technology and tagging tools. Prediction and Intelligence 18 As Howard Gardner would say, we honor multiple intelligences, from Hawkins Stanley Zdonik’s to Emily Levine’s. No Patient Left Behind? 20 Augustin, Diamond, Kovac, Lepore, Reisman We have always liked IT because it’s intellectually exciting and com- Court Jester 28 mercially rewarding. Now it is also relevant to an increasing propor- Levine tion of the world’s population. .and that outside world matters more Friction Can Be Good! 30 to the IT community. Not only must Americans pay attention to Brown, Hagel Presence in the Enterprise 32 Washington; we must also heed doings in the halls of Beijing. Our cus- Digate, Ernst, R. Schwartz tomers may speak Tagalog and use cell phones, or they may be our Fast Data in the Enterprise 37 neighbors who have grown too old to read fine print.
    [Show full text]