Goldman Sachs expects the average cost of stock in Russian retailers to hit an all-time low next year.
Photo: Oleg Kharseev
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Goldman Sachs Looks Askance at Retail
Goldman Sachs has reduced its forecast for capital investment in the Russian retail sector for 2009-2011 from $9.9 billion to $4.9 billion. Russian retail chains will be unable to grow at the same pace as previously, says a bank report released on Friday, and so will sell at lower multipliers then American and European chains, even though the situation was the reverse until 2008. The forecast is based on an oil price of $75 per barrel, a weaker ruble in comparison to the dollar and a lower average wage (with 6.7-percent average growth between 2008 and 2011, compared to 7.3-percent in 2007).
Goldman Sachs expects the average cost of stock in Russian retailers to hit an all-time low next year, with a lower coefficient to the EBITDA (5-5.8) than European (7) or American (8) retailers. Restricted access to financing has already forced Russian retailers to reconsider their development strategies. X5 Retail Group and Sedmoi Kontinent have frozen capital-intensive projects. Retailers that operate so-called hyper-markets will be hit hardest of all, the bank predicts, advising them to begin development of smaller-scale supermarkets and discount stores. It noted that X5 could open 285 new Pyaterochka stores for $100 million, if it switched strategies from buying to renting premises.
Goldman Sachs predicts that Diksi stock, currently selling for $6, will cost $8.30 next year. Magnit will sell for $8.01 (currently $4.85), Sedmoi Kontinent for $8 ($24.75) and X5 notes for $26 ($12.70). Before the crisis, Diksi stock sold for $10.10, Magnit for $12.72, Sedmoi Kontinent for $16 and X5 for $33.
www.kommersant.com
All the Article in Russian as of Oct. 27, 2008
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