Page 107 - RusRPTFeb22

q/q) with stronger sales in St. Petersburg of 72.2ths sqm (-10% y/y; +54% q/q) and Moscow sales at 56.8ths sqm (-34% y/y; +15% q/q). Overall, Moscow sales comprised 53% of total in 2021.
§ Contract sales in money terms showed a strong improvement from weakish 3Q21 with Rb24.9bn in 4Q21 (-6% y/y; +35% q/q) – 30% of 2021 sales of Rb84.4bn.
§ Average selling price remained strong with Rb193ths (+22% y/y; +1% q/q) in 4Q21, driven by Moscow (Rb262ths aver price +48% y/y) with average price in St. Petersburg down to Rb138ths (-9%q/q, flat y/y). 2021 average selling price is firm at Rb189ths for 2021 (+27% y/y), partially attributed to the launch of attractive new projects in the higher price segment.
§ Cash collections reflect sales dynamics with Rb23.9bn in 4Q21 (-18% y/y; +24% q/q) and Rb84.1bn (+3% y/y) with share of mortgage at 40% in 4Q21 and on average in 2021.
§ Etalon’s net corporate debt amounts to Rb5.1bn with the net corporate debt/pre-PPA EBITDA ratio at just 0.2x according to the press release. Besides, press release states release of funds from escrow will be an additional supporting factor in 2022.
Etalon has announced the acquisition of a Ekaterinburg land plot with a total net sellable area of 1.5mn sqm.
Etalon’s entry into the new region adds to its existing operations in Omsk and Novosibirsk. The company schedules sales from 2022 until 2034. Although Etalon’s diminishing portfolio (6mn sqm landbank now) has been one of the headwinds to its sales and overall operations, the current acquisition is sizable and covers 43% of the planned pipeline of 3.5mn sqm for this year. We believe that this leaves the company’s future growth largely dependent on one large-scale project, which has heightened realisation risks because it is located outside Etalon’s home markets of Moscow and St Petersburg, both of which have economics that are more favourable. Our focus now is on the sales realisation and the deal structure, which might put pressure on 2022 cash flows and dividends if it is one full payment, or have a less pronounced impact if it is made by instalments. Etalon’s GDRs have declined 23% in the last three months, one of the worst performances in the sector. The GDRs now trade at a sector-cheapest P/NAV of 0.2x.
· Ekaterinburg is Russia’s fourth largest city, with a population of 1.5mn. Average residential prices (RUB 96k/sqm) are considerably lower than in Moscow (RUB 249k/sqm) and Saint Petersburg (RUB 174k/sqm).
· LSR and PIK are already present on the market, having landbanks that are comparable with Etalon; however, they tend to focus on smaller-scale projects (200k-250k sqm, on average), which we view as more digestible than Etalon’s announced project.
· In its strategy, Etalon targeted entrance into five new Russian
107 RUSSIA Country Report February 2022 www.intellinews.com