Page 85 - RusRPTMar20

Pobeda saw 34% y/y growth, which once again significantly pulled the Group's numbers up.
Industry load factor was flat in December at 79%. Excess capacity was balanced by stronger demand. Rosstat statistics show that industry airfares continued to grow in January: the 7% y/y rise was above inflation and is a sign of further strengthening demand, we think.
Jet fuel prices were about RUB40,400/t in January, down 7% y/y. With a 1-mo lag in fuel contracts and MTD prices on hand, Aeroflot's purhase price in 1Q20F is shaping up at about RUB40,000/t (down 10% y/y).
Coronavirus impacts both ways. Having started to spread in January, the new virus immediately became a risk for Aeroflot (China accounts for 2-4% of its traffic). Russia has now suspended all flights to the region, except Aeroflot's. At the same time, with oil prices pushed down by new risks, jet fuel prices have fallen 19% y/y to RUB36,200/t in February, which eases airlines' costs.
VTBC reiterated its Buy recommendation for Aeroflot, as the unchanged 12-month TP of RUB150 suggests a 31% ETR.
9.1.4 ​Construction & Real estate sector news
Russia’s Ministry of Construction sees housing completions flat y/y at 80mn sqm in 2020, according to Vedomosti.
On a separate note, DOM.RF estimates that 27% of housing was sold in line with the new escrow regulations in the Moscow Metropolitan Area (as of January).
In 2019, residential completions were up 6% y/y to 80mn sqm after three years of declines. The volumes reflected a pick-up in sales after 2016 and the stabilised consumption backdrop. Last year, individual construction (up 13.5% y/y) outperformed industrial (up 0.6% y/y), with volumes at 36.8mn and 43.5mn, respectively.
From 1 July 2019, the sector switches to escrow regulation and DOM.RF’s estimates (the share of escrows in sales at 27% for the Moscow Metropolitan Area) imply that the transition is going at a solid pace.
Under the new rules, access to capital is vitally import and this could jeopardise the operations of smaller developers. The complete transition implies sizable sector consolidation and might cause downside risks to housing completions in the medium term. Large developers are in a more favourable position due as they have better access to capital, a sizable pool of projects and balanced cash flows.
85​ RUSSIA Country Report​ March 2020 ​ ​www.intellinews.com