M. video, Russia's largest domestic electronics and appliances retailer, released its audited FY 2007 financials on Thursday. The statement says that net revenue jumped by more than 53% y-o-y in dollar terms to USD 2.047 billion. The company attributed fast growth in revenue to the expansion of its retail network and the more efficient operation of its existing stores, which reported a 14% rise in their LFL sales in 2007.
M. video: key financials for FY 2007, mn USD
| Indicator | 2006 | 2007 | 2007/2006 |
|---|
| Revenue | 1336.2 | 2047.5 | 53.2% |
| Gross profit | 288.4 | 483.9 | 67.8% |
| Gross margin | 21.6% | 23.6% | |
| Commercial, general and administrative expenses | 246.1 | 405.1 | 64.6% |
| EBITDA | 53.3 | 99.3 | 86.3% |
| EBITDA margin | 4.0% | 4.8% | |
| Net profit | 14.7 | 25.4 | 73.2% |
| Net margin | 1.1% | 1.2% | |
Source: company data, Finam estimates
We are generally upbeat about the reported financials. Over the year, the company opened 37 hypermarkets, raising their total number to 122. Along with expansion into regional markets, the company exercises stringent controls over its expenses, which benefited its profit margins in the reporting period.
We regard the current market price of M. video shares as fair. Our fair price for the shares is USD 7.8 per share. We also believe that the company's robust 2007 financials may lend support to its stock valuations in the near term.
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