15 Sep 2010 11:54

Magnit to open more than 800 stores next year, analysts predict

MOSCOW. Sept 15 (Interfax) - OJSC Magnit (RTS:MGNT), Russia's largest retailer by number of stores, might increase its store-opening pace next year to more than 800 new outlets, says a VTB Capital report on meetings the chain's top management had during the company's European road show.

The VTB Capital analysts point out that Magnit has aggressive plans for 2011, including the opening of up to 800 discounters and 55 hypermarkets, which would allow the chain to boost ruble sales revenues by 36%.

The retailer is looking to keep its EBITDA margin at 8.2% at least, the analysts say.

Magnit's capital expenditures next year could rise to $1.3 billion from $1.1 billion this year. Capex will be financed with the company's own monies and with newly raised credit resources. Magnit plans to keep its net debt/EBITDA ratio to 1.4 this year, though it could rise to 1.5-1.7 in 2011.

Competition on Russia's retail market is growing at a rather slow pace, the analysts note, and Magnit will be busy increasing the number of its own non-chain stores and small networks. At mid-2010, the company owned 34% of the retail space it used for its discounters, and all the hypermarkets save one (96% ownership).

Magnit has more than 3,500 stores now. First-half sales revenues were up 21.8% year-on-year at 103.66 billion rubles. Net profits came to 3.95 billion rubles. The chain's founder Sergei Galitsky is its biggest shareholder.