Page 145 - RusRPTOct20

July-Aug PAX and PLF represent upside risks to our 3Q operating and financial expectations, albeit we flag that seasonally low 4Q will be a challenge.
9.2.4 ​Construction & Real estate corporate news
Russia's largest real estate developer ​PIK Group​ reported 34% growth in revenues under IFRS for 1H20 to RUB138.5bn ($1.9bn), in line with consensus expectations​. As reported by ​bne IntelliNews​, Russian developers were supported in the coronavirus (COVID-19) crisis by the state-sponsored discounted mortgage programme, while PIK had already shown resilience due to strong non-development revenues​. PIK could also get a further boost from the expansion of the ​state programme of renovation of the housing stock​, a market in which it already has the largest share. In the reporting period PIK's development business increased by 19% to RUB106.9bn on higher average prices, while the non-development revenues amounted to RUB31.5bn, soaring by 135% year on year due to expansion of fee development and higher exposure to the renovation programme. BCS Global Markets commented on August 31 that PIK's performance was expectedly strong, with revenues and margins growth supported by fee development expansion and higher prices. The developer showed improvement of gross margins across all segments by over 130 basis points overall, while the operational cash flow showed visible year-on-year improvement. BCS GM maintained Buy recommendation on PIK with a target price of RUB650 per share.
Russia's largest real estate developer ​PIK Group​ aims to continue to close sales offices and move the sales and other services online, ​BCS Global Markets wrote on September 2, citing the conference call of the company'smanagement.Asreportedby​bneIntelliNews,​ in2Q20​PIKreported a 34% growth in revenues​ under IFRS for 1H20 to RUB138.5bn ($1.9bn), in line with consensus expectations. Russian developers were supported in the coronavirus (COVID-19) crisis by the state-sponsored discounted mortgage programme, while PIK had already ​shown resilience due to strong non-development revenues​. The company now intends to continue to move all the stages of the sales process online, including the mortgages. Anticipated savings on commercial expenses may reach up to 30% and the effect should be seen within the next 12 months, which BCS GM sees as slightly positive. The analysts note potential upside from moving online not yet modelled in the valuation of PIK. However, the management also plans a 50% sales expansion in square metres in 3-4 years, which implies ongoing investments in land plot expansion, and further pressure on working capital.
PIK​ enters the Sochi housing market. ​PIK Group has acquired a 12.4ha land plot in Sochi. Sochi, a city on the Black Sea, is a leading beach resort in
145 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com