Page 133 - RusRPTNov20

impressive and the blended metric surged 21% y/y to a record high RUB186,327/sqm, driven by price hikes across the market and Etalon’s aggressive approach in Moscow (up 23% y/y). The developer provided details on its future flagship ZIL-Yug project, with NSA of 1.2mn sqm, entering into an agreement with City of Moscow and anticipating a sales launch in 4Q20-1Q21, with a total purchase price of RUB36.2bn, and RUB3.95bn in payments next year. The reported 9mo20 sales and cash collections figures imply 73-75% of the management guidance for 2020, which has now received additional support.
· Sales volumes rebounded strongly in 3Q20, showing y/y growth of 10% to 150,451sqm, after the 31% y/y correction in 1H20. For 2020, management guides for 500,000sqm, down 20% y/y, which we think is a conservative scenario, implying a 25% y/y decline in 4Q20.
· The subsidised mortgage programme was the key driver for the sector in 3Q20. As its cap was lifted 50% to RUB12mn for Moscow and St Petersburg, Etalon benefited from higher participation in the programme and its share of mortgages surged 11pp y/y to 67% for apartments. The extension of the programme to YE21 is an additional tailwind.
· Pricing was upbeat for the period, as apartments added 21% y/y to a record RUB186,327/sqm. Moscow saw a more aggressive approach from Etalon, with a 23% y/y advance, while the contribution to total sales remained comparable y/y (53%). In 3Q20, primary prices were up 9% in Moscow and 10% in St Petersburg.
· The company disclosed the parameters for ZIL-Yug, as Etalon has entered into an agreement with the City of Moscow. Total net sellable area of 1.2mn sqm could see sales launched in 4Q20-1Q21. The total purchase price is RUB36.2bn, implying some RUB30,000/sqm (compared with the RUB53,000/sqm for the consolidated portfolio valuation as of YE19). Land payments are RUB3.95bn next year, RUB3.65bn in 2022, RUB8bn in 2023, and RUB16.6bn in 2024, implying to us that the pressure on cash flows is manageable in the early years, while the project could last until 2030.
· During the conference call the company stated its intention to hold a strategy day on 11 November. Etalon has scheduled the record day for its RUB12/GDR dividend with a yield of 9.5% for 20 November.
​LSR Group​ (LSR) reported a strong recovery in sales in 3Q20, ​with sales volumes jumping 33% y/y. New contract sales in value terms soared 48% y/y to RUB29bn supported by the c. 9% y/y growth in average selling prices last quarter, whereas apartment prices (excl. parking sales) grew 13% y/y. St. Petersburg was the best performing segment, with new contract sales doubling y/y. Moscow demonstrated the weakest performance, as the 49% y/y growth in prices offset the 22% y/y drop in sales volumes. The performance of LSR’s Ekaterinburg segment was more balanced, with increased sales volumes (+9%
133 ​RUSSIA Country Report​ November 2020 www.intellinews.com