Page 106 - RusRPTNov18

period. Unnamed sources close to OAC told Vedomosti daily that development of PD-14 engines cost the budget about RUB70bn. Previously MC-21 jet, slated for commercial debut in 2020, was tested with PW1400G engines of Canadian Pratt & Whitney. Reportedly the buyers will have a choice which engine to install on the aircraft. In 2019 the engine is planned to the certified in the European Aviation Security Agency (EASA), which will allow to export the engines, according to the ministry.
9.2.4 Construction & Real estate corporate news
Russia's largest real estate developer PIK Group closed the first deal financing the contract through an escrow account at state-controlled VTB Bank for RUB19.9bn after the Kremlin banned pre-purchase deals this summer, the press-service of the developer said. According to new rules banning pre-selling the apartments aimed at protecting future homeowners , the funds of customers will be accumulated on escrow accounts that become available to the developers once the property is put on the market. As of July 1 2019 the use of escrow accounts will become mandatory. The rules are expected to further consolidate the real estate sector along largest players with good access to banking finances and intensify the rivalry between PIK, LSR Group, and Etalon. Previously PIK and its main peers posted robust second-quarter operating results , while the PIK also promised to resume dividend payments with a solid payout and Etalon said it will channel shares to top management incentive programme .
PIK has reported strong the third quarter of 2018 operating results , being able to maintain its records set last year. Residential volumes were flat, at 466,000sqm, while prices added 6% y/y amid an extending share of regional projects (4pp y/y to 11%) that are price dilutive. The disposal of the utility servicing business in late 2017 caused a 4% y/y slide in cash collections. Management reiterated its annual guidance, which has been 70-80% achieved YTD, implying moderate upside risks and strengthening of the company’s position as leading developer in Russia. We reiterate our 12-month Target Price of RUB 400, which implies an ETR of 18%; Hold reiterated. Impressive volumes. PIK reported 466,000sqm in sales, a flat result y/y from a strong base of 3Q17. The company saw a 2-3% y/y decline in the Moscow metropolitan area, while regional projects accelerated 1.5x y/y to 51,000sqm during the quarter. New launches to the market were up 11% YTD to 1.8mn sqm; the structure shifted materially to the third quarter of 2018 (52% of total vs. 34% a year ago), which is likely to support the fourth quarter of 2018 trading. Amid a growing share of regional projects, the blended residential price added 6% y/y, causing an 8% y/y advance in the value of sales to RUB 51.7bn. The disposal of the utility servicing business in late 2017 was the prime driver of the 4% y/y correction in consolidate cash collections, while the share of the residential segment reached 97%, vs. 94% a year ago. The impressive trends were driven by strong mortgage sales (65% at PIK), as clients see local lows for rates, have concerns about macroeconomics and the ultimate impact of the regulatory changes on housing supply.
Etalon Group has released an update on the value of its portfolio as of end-the first half of 2018 . Previously, it had only disclosed estimates as of the end of the year. The total GAV was down 2% from the end-2017 level, to circa RUB132.5bn. The real estate portfolio was valued at RUB123.8bn, while the construction division accounted for the remainder. The volume of unsold NSA
106 RUSSIA Country Report November 2018 www.intellinews.com