Page 76 - RUSRptAug18

value," Aton Equity believes. Another positive conclusion is that Zarenkov will not sell the stake on the market, which eliminates the overhang risk. Aton analysts do not expect any changes in the company's strategy due to the changes in Etalon's shareholder structure. The company remains Aton's top pick in the real estate universe with a Buy recommendation at a target price of $4.
Russian real estate major Etalon posted 22% year-on-year sales growth in rubles in the second quarter of 2018, while reporting a 5% y/y increase in sales volumes. In the reporting quarter prices increased by 10% y/y, made up in equal parts from price inflation and higher prices from projects at more advanced stages. Major developers such as Etalon, PIK, and LSR Group (LSR) are set to benefit from the ongoing regulatory changes in the sector that will limit the pre-sale of housing under share agreements, giving the upper hand to large companies with access to financing sources.
Leading Russian real estate developer PIK reported robust second quarter results on July 10 and management indicated upbeat results for the rest of the year. PIK has reported its the second quarter of 2018 operating results, featuring 6% y/y growth in sales volume to 413,000 sqm and 9% y/y growth for gross cash collections to RUB 54.1bn ($870.5mn). Average retail prices surged 3% y/y to RUB 106,000, while mortgages accounted for 64% of sales in the second quarter of 2018.
Russia's largest real estate developer PIK Group will launch an apartment rental service in Moscow, investing up to RUB500mn ($8mn) in the new service in the next two years, Vedomosti daily said on July 25. Major developers such as PIK , Etalon , and LSR Group are set to benefit from the ongoing regulatory changes in the sector that will limit the pre-sale of housing under share agreements, giving the upper hand to large companies with access to financing sources . The market leader PIK most recently promised to resume dividend payments with a solid payout, while both Etalon and LSR Group posted solid second-quarter results . Reportedly the new service PIK-Arenda will be managed by the former team of Russian Uber and will seek to make the rental market more transparent, facilitate better information on housing stock supply, and ease of transactions. In developed countries the share of rentals reaches 70-80% of all housing market, while in Moscow the share is currently at 10%. The company estimates that there are about 0.7mn homeowners that could become suppliers for PIK’s rental service.
One of the largest Russian real-estate developers LSR Group posted 24% quarter-on-quarter and 69% year-on-year sales volume growth in the second quarter of 2018. "On the surface, LSR released the most aggressive volumes advance," VTB Capital commented, noting that this mostly reflects "the favourable comparison base as the market offer was artificially slowed to reflect changing customer preferences in 2017." Previously LSR’s main peer Etalon also posted robust second-quarter results , while the market leader PIK promised to resume dividend payments with a solid payout . Major developers suchas PIK ,E talon ,andLSRaresettobenefitfromthe ongoingregulatory changes in the sector that will limit the pre-sale of housing under share agreements, giving the upper hand to large companies with access to financing sources . In the second quarter, "the reported sectoral trading updates positively surprised us," VTB writes, "as PIK and Etalon added 5-6% y/y in volumes from a robust base, while LSR got closer to its true sales potential."
76 RUSSIA Country Report August 2018 www.intellinews.com