OREANDA-NEWS. June 09, 2010. X5 announced a 20% average price decrease in Perekrestok supermarkets for 3,500 items (a quarter of total items). The price for most popular products (approximately 5% of total items) will be set at the minimum market price, reported the press-centre of OTKRITIE Financial Corporation.

View: The price decrease is in line with the company's 'close to the consumer' policy, and we estimate the total price decrease at less than 1% for X5. The decrease in price might be compensated by a n increase in traffic. In a press release, X5’s CEO Lev Khasis was quoted as saying that the company has become more efficient on an operating level and plans to continue investing in price, thereby investing into customer loyalty. We believe that the news will be neutral for the stock price.

Valuation and Action: The stock trades on a 2010 EV/EBITDA of 10.1x, a 20% discount to both EM peers and Magnit.