OREANDA-NEWS. January 21, 2010. X5 posted a trading update for 4Q09 that was 3% above the Bloomberg consensus and 5% below our estimates. The retailer outperformed Magnit in 4Q09 on LfL performance (we estimate Magnit's Lfl growth at -4%). - Net revenues in 4Q09 were US2,621m (11% YoY increase). LfL sales growth was 7%, on the back of a 5% rise in traffic and a 2% basket increase. - The discounter segment (55% of revenues in 2009) exhibited an impressive 16% Lfl growth on the back of 12% traffic gains and a 4% basket increase, reported the press-centre of OTKRITIE Financial Corporation.

View: The better strategy choices made by X5 in 2009 helped the company outperform MGNT throughout the year, despite the fact that X5 operates in much more competitive markets (Moscow and St. Petersburg). In our view, X5 will continue to outperform well into 2010.

Valuation: X5 is trading on a 2010E EV/EBITDA of 10x, which is in line with MGNT (MGNT - 10.3x for GDRs). The stock is trading with a 19% and 26% discount to EM peers on 2010 and 2011 EV/EBITDA, respectively.

Action: We reiterate our BUY rating for X5 and suggest that investors consider switching from MGNT into X5 on the superior Lfl performance (which translates into top line performance).