Page 99 - RusRPTMay20

compared to the same month last year, the International Airport Association said on April 1. Russia suspended all international regular and charter flights on March 27. Air carriers are allowed to only evacuate Russians home. However, the ban does not cover freight, postal, sanitary and humanitarian flights.
Aeroflot shows 80-90% decline in passenger traffic for April​. VTBC started to track Russian airport visitor numbers at http://www.traffic-monitor.info/ in real-time. The source has relative data for the last four days, during, which time Russian traffic fell some 71% from the preceding weeks, or an 80% decline y/y if we adjust it to the 28% y/y decline in March. This approach is supported by preliminary data from Russian airports, which showed an 89% y/y traffic fall on 5 April.
Overall, traffic is now below our base case forecast of a 70% y/y decline in total PAX in April, and closer to our bear case of a 100% decline. However, we still see value in Aeroflot’s stock in this extreme scenario, as it would still produce a 12-mo TP of RUB80, suggesting an ETR of 14%. (see our Aeroflot – It can handle even stronger pressure of 27 March).
Besides that, newsflow has been intensive for the Russian airline industry.
Aeroflot has announced it has cut 61% of frequencies on domestic routes. According to Tutu.ru, 88% of industry domestic flights were suspended as of 7 April, which is below a 50% y/y domestic decline expected by us in our base case.
Vitaly Vantsev, the Chairman of the Board of Vnukovo airport, forecasted almost no traffic in April-June, and no recovery thereafter, which would result in a 50% y/y decline of Russian airline traffic in 2020. VTBC says that such expectations are not supported by Chinese data, where traffic saw an 85% y/y decline during the peak of the outbreak, February, and recovered to only 61% fall in March.
Alexander Ponomarenko, co-owner of Sheremetyevo, also forecasted a bearish scenario, with the resumption of international flights in July. We note that our bear case envisages resumption in June.
9.1.4 ​Construction & Real estate sector news
In 1Q20, 15.4mn sqm (-1.3% y/y) of residential premises were put into operation. ​Construction activity, which is likely to remain under pressure throughout 2020, is to be supported by the measures proposed by the government.
The government launched a subsidised mortgage programme, under, which it is possible to take a mortgage at a subsidised rate of 6.5% per annum to purchase new housing. The programme is to cost the budget around RUB6bn in 2020.
In addition, the government is considering allocating RUB12bn to support lending to the construction industry, increasing advances under contracts in infrastructure construction from the current 30% to 50% and increasing by RUB30bn the funds for protecting the participants of share building.
99​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com