Page 159 - RusRPTApr21

issues. Our 12-month TP of $1.80 now implies a 19% ETR: Hold reiterated. Downside risks come from unknowns associated with land acquisitions.
§ The EGM has today voted to increase the share capital by an additional 88.5mn shares. This figure is equal to 30% of the existing capital.
§ The voting structure has not been disclosed, but we think there was a sizable participation by minority investors and support for a share capital increase in order to get a majority, as the free float is currently 74%.
§ Among the announced decisions is the opportunity for pre-emptive rights for potential future placements, while the final details of the offering have yet to be made public.
§ The proceeds are to be put toward increasing the landbank. It has been significant used up of late, decreasing 15% YoY to 2.8mn sqm as of YE20, so it is now at the level it was prior to the consolidation of Leader-Invest.
§ St Petersburg sees the greatest need for new land plots as its total area had dropped to 0.4mn sqm as of YE20 (15% of the total). We consider land acquisition in this region to be vital if the company is to keep its established market leadership.
§ If exercised in full, the potential proceeds could reach some USD 150mn at the current share price. Given the relatively small figure, we anticipate more details on the potential land acquisitions and their structure, while limited upfront payments could offer a reasonable landbank expansion for Etalon.
§ In 2020, the company deleveraged to RUB 1bn net debt, from RUB 21bn the previous year, taking into account project financing and cash on escrow accounts. Low leverage raises additional concerns for the issue, while the proceeds are required for equity participation into the project and pre-development, according to Etalon.
§ Etalon’s GDRs have returned the worst sectoral results YTD, with a 5% correction, and the potential share capital increase weighs on the investment case. This new issue at a low multiple is likely to bring a muted reaction, although it could be offset by a strong dividend commitment (a 10% yield in our 12-month forecast).
LSR Group (LSR) released its 2020 IFRS results. The key highlights are as follows.
159 RUSSIA Country Report April 2021 www.intellinews.com