Credit Suisse raised X5, Russia’s largest supermarket chain, from „neutral” as it started coverage of Seventh Continent, a Moscow-based food retailer. The bank also initiated OAO Magnit, the country’s second-largest grocer, with a „neutral” rating. Russians are spending more on food as a ninth year of economic growth boosts their incomes. Real wages in the country may rise on average by as much as 8% a year „in the medium term,” Credit Suisse said in a report today. Russians spent 48% of their disposable income on food last year, according to the bank. „Food retail holds significant potential – the Russian food market could become Europe’s biggest within a few years,” Credit Suisse said in the note. „Potential exists for further organic growth and consolidation of the sector.”
Russia is the world’s seventh most-populous nation with 144 million citizens. The country’s top three food retailers have a combined market share of more than 5%, according to Credit Suisse. The bank expects takeovers in the industry to be led by X5 and international retailers. The bank raised its 12-month stock price target for X5 by 42% to $34.10. X5’s shares hadn’t traded as of 9:20 a.m. in London, where they are listed. The stock advanced 60 cents, or 2.1%, to $29.60 yesterday, valuing the company at $6.4 billion. It’s advanced 14% this year compared with the 0.6% gain in the benchmark Russian Trading System index. Credit Suisse initiated coverage of Seventh Continent with a 12-month price target of $35.70. The shares were unchanged at $27.70 in Moscow yesterday, valuing the company at $2.1 billion. Russian stock exchanges are closed today for a national holiday. Magnit was initiated with a price target of $43.20. The shares added 0.9% to $40.95 in Moscow yesterday, valuing the company at $2.95 billion. They’ve risen 15% in 2007. (Bloomberg)
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
