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The main pillars of the strategy look quite ambitious. The company targets double-digit growth of NCS and plans to increase its volumes under construction twofold. Moreover, the pre-PPA gross margin is targeted at above 35% (versus 29% in 9m20), SG&As are planned to decline from the current 14.1% of revenues to 10% by 2024. Pre-PPA EPS growth is therefore targeted to exceed the strong double-digit growth, which is envisaged for sales. Target IRR is at 17-18%.
New construction technologies like standardization of monolithic buildings and cast on site could decrease project implementation time by roughly three months. Moreover, the company plans to introduce industrial technologies like modular buildings, CLT and modern prefabrication together with partners. These initiatives could also decrease on-site construction by roughly six months.
Etalon Group expects small players to leave the market and believes that the share of larger, more established players will continue to increase. This creates some opportunities for growth in regions outside of Moscow and St Petersburg and also makes M&A a possible way to grow the company. Though the management has indicated that at the moment there are no fixed targets for M&A. It also said that it is not currently considering an SPO as a way to finance growth.
Additional focus was made on digitalization from big data analytics, which will help fine-tune the selling strategy and offer a better developed system of project/location planning.
In terms of the Zil-Yug project, the starting price will be at the level of R230k m2, with total NSA reaching 1.2mn m2.
9.2.5​ Retail corporate news
X5 Retail Group​ announced that it is considering carving out its digital businesses through a private placement or IPO. ​The retailer seems to have been inspired by OZON’s successful placement, and the retailer is looking at various options to monetize its rapidly growing online businesses. Perekrestok Vprok looks to be the most obvious and relatively mature candidate for a spin-off. Burgeoning growth in the underpenetrated e-grocery market and the near-term prospects of positive EBITDA should arouse investor interest, we think. That said, it is hard to deny some of the obvious synergies that Perekrestok Vprok enjoys from being part of X5’s business franchise, and Perekrestok Vprok would like to retain these synergies after a spin-off, we think. While there are more questions than answers at this stage, we believe the news should be positive for X5 shareholders, and it should urge them to assign some value to the group’s rapidly growing online operations. Vladimir Salakhutdinov, Head of Strategy at X5, was cited by Interfax as saying that the
125 ​RUSSIA Country Report​ December 2020 www.intellinews.com