Russian electronics retailer M.Video boasts 25% growth in 3Q20

Russian electronics retailer M.Video boasts 25% growth in 3Q20
Russia's leading electronics store M.Video is also Russia's third biggest e-commerce player by value of sales as the retail business goes through a transformation
By bne IntelliNews October 27, 2020

Russian electronics retailer M.Video-Eldorado has posted 25% year-on-year revenue growth in 3Q20 to RUB110bn ($1.43bn), with a 2.4-fold surge in online revenues.

As reported by bne IntelliNews, M.Video-Eldorado saw an increase in its consumer electronics demand due to the coronavirus (COVID-19) lockdown, and recently recommended paying 100% of adjusted net income in dividend for 1H20.

With the growth shown in 3Q20, M.Video became the fastest-growing listed retail chain, Sova Capital commented on October 27, expecting the strong sales momentum to continue into 4Q20, which "should mean strong margins in 2H20 and a decent second dividend payment for 2020."

Online sales continued to be a key driver in the group’s top-line generation, with 2.4-fold growth accounting for 59% of turnover in 3Q20 versus 69% in 2Q20 and 47% in 1Q20. 

"The company continues to see strong demand for home office equipment and durable household goods, reflecting the current emphasis on working remotely," Sova notes.

The analysts at Sova believe that M.Video growth is not reflected in consensus estimates, which still assumes 8.7% y/y growth for 2020 versus an actual growth of almost 14% y/y over 9M20.

"M.Video’s strong 2H20 and FY20 financial performance should mean a decent second dividend payment to be paid out in 1H21," the analysts argue, reiterating a Buy recommendation on the name.

Sova reminds that the company is a structural leader in the Russian consumer electronics market, with a share of 27% as of 1H20. 

"The retailer’s advanced digital channels are nicely complemented by its nationwide chain of stores, which are integrated on a single business platform. This enables M.Video to serve its customers with equal efficiency across all points of contact and sales channels," the analysts note. 

M.Video, controlled by Safmar Group of billionaire Mikhail Gutseriev, completed a mega-merger with rival Eldorado in March 2018 to form the biggest consumer electronics retail chain in Russia, and a top ten European player. 

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