OREANDA-NEWS. April 20, 2010. X5 reported 4Q09 and FY09 IFRS results that came in line with consensus on revenues and EBITDA, but fell short of consensus on net income, reported the press-centre of OTKRITIE FC.

-Revenues were in line with consensus at USD2,636m, showing an 11% YoY increase (2% below our estimates).

-Gross margin significantly compressed YoY to 23.8% (vs. 25.5% a year ago and 24.8% in 3Q09)

– a sign that the company continues to invest in price, driving up customer traffic up (evident in 1Q10 in the discounter segment).

-EBITDA came in line with consensus at USD 227m (flat YoY), while the EBITDA margin declined 90bpts YoY to 8.6%. However, adjusted for ESOP charges, EBITDA margin was 9.7%.

-The company incurred a one-off, USD 48m impairment charge in 4Q09.

-Effective tax rate in 4Q09 was higher than anticipated at 32.4% (we expected 24.8%). The effective tax rate for FY09 was 37.4% (we estimated 32%).

-Net income was 52% below consensus.

View: The results are in line with consensus on EBITDA but below on net income, thus we view the results as neutral. Non-recurring expenses, such as the impairment charge, ESOP, and a higher effective tax rate, are the main reasons for underperforming on net income.

Valuation: The stock trades on a 2010E EV/EBITDA of 11.3x which is a 4% discount to EM peers and a 12% discount to Magnit (GDRs).