Page 91 - RusRPTFeb20

base and new launches​. ​The range of y/y declines in residential volumes was 11-19%, as the companies faced the challenging base of the previous year and sales launches were slower after the new regulatory framework came into effect. Prices almost offset the volumes corrections (up 10-19% y/y for the quarter) while annual management plans and our forecasts for 2019 were generally met. For 2020F, the guidance from PIK was most aggressive, pointing to 9% y/y volume growth; LSR and Etalon forecast mid-single digits. We see the core theme this year being the accelerating transition to escrow schemes (with the leaders allocating up to 50% of sales) and sector consolidation. Our forecasts remain intact. Etalon (12-mo TP $2; ETR 16%; Hold) sees no change, but for LSR, rolling the valuation date means a 12-mo TP increase of 14% to RUB 1,050 (ETR 26%; Buy). PIK is our preferred exposure (12-mo TP RUB 500; ETR 29%; Buy), having the most efficient and rapidly growing profile. 4Q19 operating data. The range of y/y declines in volumes was from PIK’s 11% y/y to Etalon’s 19% y/y (albeit a lower correction if the Leader-Invest acquisition were factored in). The key reason for the declines were the record numbers in the fourth quarter of 2018 and softer approach to sales launches, as the companies chose to see how the sector adopted to the introduction of escrow accounts. The homebuilders under our coverage outperformed the broader market, which in Moscow suffered a 30% decline in primary deals in October-November. The prices over volumes strategy prevailed, and Etalon disclosed the highest increase for 4Q19, at 19% y/y, as it benefitted from product mix enhancements. PIK and LSR raised prices 10-12% y/y.
In the biggest real estate deal in 2019 In the end of 2019 Metrika Investments acquired the office part of the multi-functional real estate Neva Towers in the Moscow-Citi centre​, ​Vedomosti ​daily reported on January 20 citing unnamed sources close to the deal. The amount of the deal is not disclosed, but is estimated at up to RUB22bn ($356mn), which would make it the largest office real estate deal in Russia in 2019.
9.2.5​ Retail corporate news
Russia's largest electronics retailer ​M.Video-Eldorado​ posted consolidated revenue decline of 3% year-on-year to RUB115bn, ​with like-for-like sales down 9.7% in 4Q19 after 9.9% decline seen in 3Q19. As reported by ​bne IntelliNews,​ previously in 2019 M.Video’s top line was under pressure, but it still ​managed to beat the market in 1H19​. 4Q19 results suggest that M.Video, controlled by the Safmar Group of billionaire Mikhail Gutseriev (52.5%), could fall behind its guidance for last year. The ​retailer guided for modest growth in 2019​, targeting RUB380bn, expanding by 7.65%, slowing two-fold from the 15.7% seen in 2018. The retailer believed that in 2018 many consumers were renewing their electronics bought 4-5 years ago ahead of the 2014 ruble crash, and now expects a slower sales cycle until the next renewal wave.
Russian shoemaker and retailer ​Obuv Rossii​ reported a trading update for 4Q19, showing 22% year-on-year growth in revenues, ​following a slowdown seen in 3Q19. However, the growth in the reporting quarter was attributed to cash loan business that soared by 43%, while like-for-like sales were almost flat at 0.8% year-on-year growth after 8% y/y seen in 3Q19. As reportedby​bneIntelliNews,​ in3Q19Obuvshowedtherevenuegrowth, decelerating to 12% y/y from 20% y/y in 1H19​. Its cash loan business
91​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com