Retail chain Seventh Continent was among the first retailers to publish its preliminary financials for 1H 2008. The press release from the company says revenue jumped by more than 34 % in dollar terms y-o-y, which is generally in line with expectations. At the same time, the company's hypermarkets reported a 63% boost in their overall revenue, compared to the year-earlier period.
Table. Seventh Continent: basic financials for 1H 2008
| Indicator | 1H2007 | 1H2008 | Change 1H2008/1H2007 |
|---|
| Sales revenue (with VAT, USD mn) | 658 | 882 | 34% |
| Moscow region | 550 | 706 | 28% |
| Other regions | 107 | 177 | 65% |
| Total number of stores | 124 | 137 | |
| Retail space (thous. sq m) | 143 | 168 | 17% |
Source: company data, Finam estimates
We are upbeat about Seventh Continent's preliminary financials for 1H 2008, which, however, are unlikely to have a tangible effect on its stock valuations in the short-term. The reason for this is the slower revenue growth, despite the faster pace of opening new stores in 2008. The company has opened ten retail outlets so far this year, including three hypermarkets.
Our estimates put the fair price of Seventh Continent shares at USD 28.1 per share, which implies an upside potential of over 7.4% to the current stock valuations.
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