Russia’s toy store giant Detsky Mir is mulling a launch in Belarus, the company said on May 7.
Detsky Mir is currently considering opening branches in Belarus in the leading stores and shopping malls as well as looking at entering the market via the acquisition of local retail players, according to Kommersant.
“Detsky Mir is already present in other neighbouring markets, operating 22 stores in 12 cities in the Republic of Kazakhstan. Entering the Belarus market could support the company’s aggressive development pipeline: management guidance points to at least 70 new stores in 2018 and 250 new outlets in 2018-21F,” VTB Capital (VTBC) analysts said in a note.
“The figures would imply a blended selling space compound average growth rate (CAGR) of 10%, which would make Detsky Mir one of the fastest growing companies in our coverage universe. In our view, Detsky’s scale, the recently streamlining of processes and the strong awareness of its brand in Belarus from Soviet times provide good grounds for successful retail operations,” the bank added.
VTBC forecast the company’s revenues would grow by 15% y/y in 2018 and with profitability margins remaining comparable y/y.
“The capex-lite roll-out and robust cash flow generation mean that our model returns a 12-month dividend yield of 9%. We consider the 2018F EV/EBITDA multiple of 6.9x as appealing,” the bank added.