Page 129 - RusRPTJan21

The second wave of coronavirus continued in November. Major European countries – Germany, France, the UK, and others – had light lockdowns in place. Some of them prolonged restrictions into December and January, which supports our expectations on weak traffic during winter. As a result, we expect borders to open no earlier than 1Q21.
9.1.4 ​Construction & Real estate sector news
BCS Global Markets on December 14 increased the target prices for Russia's largest listed real estate developers by 10-15%, to reflect the expectations of higher prices and improved outlook for 2021-2202​. The analysts maintained Buy calls for the shares of ​PIK​ and ​LSR Group​, while reiterating a Hold call for ​Etalon​, and seeing PIK as the top pick in the segment as it offers the best expected growth in 2021-2022. As reported by ​bne IntelliNews,​ PIKshowed​solid1H20​and​3Q20results​despitethecoronavirus (COVID-19) crisis, and has a few potential value triggers, such as more state-sponsored housing renovation​, and cost gains from ​moving sales operations online​. "After rallying 23-34% in 3Q20 on mortgage subsidies from the state and strong sales growth, homebuilders’ shares consolidated in anticipation of further triggers," BCS Global Markets wrote. However, even as the analysts see no further reduction in the key rate and expect growth in demand to cool, the view on the real estate sector remains positive. Further growth triggers include ongoing sector consolidation, which should help the largest players to gain market share. Furthermore, BCS GM expects margins to grow in 2021-2022 on higher prices. For PIK, its active land bank expansion should be reflected in higher contract sales. The 2021-2022 financial estimates for LSR and Etalon were also revised up due to higher prices, but less so. "To meet their medium-term strategy targets, both LSR and Etalon will have to step up their land acquisition," BCS GM analysts warn. Overall, the valuation of the real estate sector "looks inexpensive at a 2021 estimated Enterprise Value/Ebitda of 3.4x-4.5x," BCS GM notes.
There is a shortage of builders in Russia, but Russians do not go to construction sites​. Labor force will be found abroad and delivered "wholesale" The shortage of workers at Russian construction sites has become so acute that the Ministry of Construction proposed to allow organizations to import labor in a simplified manner and even coordinated this with the Ministry of Labor, the Ministry of Internal Affairs and Rospotrebnadzor, writes Kommersant.
129 ​RUSSIA Country Report​ January 2021 www.intellinews.com