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The 2014 Emerging EMEA Research Team: Consumer/Nondiscretionary, No. 3: Nicholas Ashworth & team
After three years as a runner-up, the Morgan Stanley team led by London-based Nicholas Ashworth advances to third place. The researchers maintain a constructive stance on the regions consumer staples names, in general, while noting differences across markets. Whilst many commentators have been concerned with a weak consumer outlook given macro headwinds, we are of the view that the consumer will be resilient, says Ashworth. In Russia we saw trading down in the food sector post the last crisis and see little ability to trade down further currently, meaning less risk for the retailers. In Turkey we have been positive on some aspects of food retail in the face of weak macro. In Poland we are more cautious on food retail 2013 saw the beginning of a price war, and this is continuing in to 2014, lowering profitability across the sector. One long-standing favorite that they still find appealing is discount supermarket operator Magnit. Since October 2012 the analysts have urged investors to overweight the global depositary receipts of Russias largest retailer, then trading at $34.94, citing Magnits strong competitive advantage over its peers; ability to increase new-space growth year after year, while maintaining or improving margins; and potential upside from its small but quickly growing cosmetics business. Over the 12 months through May, the GDRs climbed 4.8 percent, to $58.20, besting the sector by 6.2 percentage points. For the life of the call, they have bolted 58.8 percent, eclipsing the sector by 44.5 percentage points. This year, Ashworth also co-leads, with Michele Olivier, a runner-up team in Consumer/Discretionary.