Page 160 - RusRPTApr21

· Revenues reached RUB118bn (+7% y/y), in line with our model. The core support came from subsidised mortgages.
· Adjusted EBITDA was up 30% y/y (RUB27.4bn), 13% ahead of our estimates, while the margin improved 4pp y/y (to 23%).
· The adjusted EBITDA margin in residential development reached 28% in 2020 (+5pp y/y), while the building materials segment saw a 2pp y/y uplift (to 19%)
· The bottom line, adjusted for the effect of FX, the allowance for doubtful debts and interest expense, related to the significant financial component, increased 52% y/y to RUB15.7bn, backed by strong operating profit.
· Net debt/EBITDA reached 0.6x as of YE20 vs. 1.1x a year ago. NOCF, including cash on escrow, stood at RUB12bn (flat y/y).
· The portfolio increased 9% y/y to 8.2mn sqm and 33% y/y in monetary terms, to RUB276bn.
· St Petersburg is still the dominant region, with a 69% share in unsold area and 56% in total market value, followed by Moscow (19% and 39%, respectively)
· For 2021, LSR guides for 892k sqm of volumes (+8% y/y), RUB106bn in sales (+12% y/y), with completions of 789k sqm (+17% y/y), and is to launch 1mn sqm (+28% y/y)
The company benefited from the market environment, particularly from growing demand due to subsidised mortgages and stable construction dynamics. The adjusted EBITDA margin was lifted by the 15% YoY surge in prices and LSR's initiatives aimed at improving its profitability over the past few years, as well as the optimisation of production costs in the wall building materials segment. As a result, the adjusted EBITDA margin reached 23% in 2020, 4pp above our estimates, while in absolute terms adjusted EBITDA was 13% higher than in our model. The adjusted bottom line was supported by strong operating profit (+37% YoY), beating our assumptions by 18%. The current liquidity position and leverage of 0.6x and NOCF of RUB 12bn, which includes cash from escrow, support our annualised dividend yield forecast of 9.5% and we think that the final recommendation is going to come soon. Our model factors in a 5% YoY volume expansion for 2021F, and we anticipate more details about the final decision on whether the subsidised mortgage programme is going to be prolonged beyond 1H21, and if so, its eventual scale.
LSR’s GDRs and shares were down 5% in the last three months, on par with Etalon, but lagging 28-30% bounce in Samolet’s and PIK’s shares, respectively. We consider LSR as still offering the most balanced sectoral exposure with a P/NAV multiple of 0.32x, while recent concerns over volumes are now addressed and have been mostly offset by an impressive surge in prices.
160 RUSSIA Country Report April 2021 www.intellinews.com