Page 158 - RusRPTApr21

Pobeda's flights from Sheremetyevo are to contribute 1.5mn PAX in 2021, or a third of the aforementioned growth. We see these flights being attached to Aeroflot’s schedule so as to have transit potential.
Aircraft will not have to overnight at the airport, and will fly to the Russian East to keep utilisation high. We note that Pobeda’s average utilisation rate of 13 hours is 30% above Aeroflot's. In 3Q20, it was even the world leader in its utilisation of B737s.
Sheremetyevo airport ensures a minimum 25-minute of turnaround for the aircraft, which Pobeda currently has at Vnukovo airport. This is also going to contribute to high efficiency. Aeroflot's turnaround turn, for example, is 1.5 hours.
Overall, we see the news about the strategy’s development as positive. More importantly, its effects are already likely to be seen in a couple of months, despite the name '2028' perhaps giving the impression that this is something distant and intangible. The company’s 18pp underperformance to EU peers is unjustified by the fundamentals, in our view. We reiterate our 12-mo TP of RUB90 (ETR +28%) and Buy recommendation.
9.2.4 Construction & Real estate corporate news
Etalon Group reported its end-2020 portfolio valuation. The gross asset value rose 8%. As the valuation of the production unit remained virtually flat at R12.6 bln, the growth was fully attributable to the value of the project portfolio. Although unsold NSA fell 15% to 2.8 mln m2 from 3.3 mln m2 in 2019, the value of the project portfolio climbed by 8% to R191 bln. Higher prices were the likely cause: for example, for the Zil-Yug project (now being marketed as Shagal), the estimated selling price surged 41% from the previous valuation report to R280,000/m2, while the average price across the entire project portfolio increased by 25%. The company also disclosed the discounted cost of liabilities related to the cost of rezoning land and outstanding payments for land. We understand that these payments are to be subtracted from the GAV to derive the NAV. As the company has already disclosed its net debt estimate in its 2020 operating results (R19.6 bln), we estimate Etalon Group's P/NAV at just 0.28.
Etalon’s EGM has approved a new issue of 88.5mn shares, equal to 30% of the existing capital. The issue raises a number of concerns for us, as the share price is close to its historical lows, the P/NAV multiple is a distressed 0.2x, new debt is a preferred option (in our view) as leverage is close to zero, and at the current price the proceeds will be limited to $150mn. They are to be used to scale up the landbank, which had dropped 15% y/y to 2.8mn sqm as of YE20 (it almost halved in St Petersburg to 0.4mn sqm). Etalon’s GDRs have lost 5% YTD, which we think reflects investor concerns about potential share
158 RUSSIA Country Report April 2021 www.intellinews.com