Page 115 - RusRPTJun20

9.2.4 ​Construction & Real estate corporate news
LSR Group​ (LSR)​ has released robust 1Q20 operating results, with residential volumes up 6% y/y and residential prices gaining 13% y/y (RUBsales up 19% y/y). The quarter was lifted in March, as demand surged against the backdrop of a weaker local currency. April, though, was under pressure since sales offices and construction sites were closed, while mortgages require the borrower to be physically present. We anticipate a decline of up to 50% y/y in April but a tangible recovery in May, supported by the launch of the subsidised mortgage programme with a rate of 6.5%. For 2020, management guides for a 6% y/y expansion in volumes and 13% y/y advance in RUBsales that are now starting to see downside risks (based on consumer spending after the restrictions are lifted and how the mortgage programme is rolled out). LSR’s shares have recovered 14% from their lows in mid-March, vs. the 19% bounce in the MOEX, and now demand P/NAV of 0.3x, representing our preferred sector exposure (12-month TP RUB800; BUY, ETR 38%).
9.2.5​ Retail corporate news
X5 becomes the biggest e-grocer in Russia. ​X5 Retail Group​ has announced that its online sales grew 4.7x y/y to RUB1.7bn in April (including VAT) and that, according to its estimates, it has become the largest e-grocer in Russia. For the company, online sales represented 2% of its total in those areas where it is present (Moscow, Moscow Region and St Petersburg) vs. 0.2% on the consolidated level last year. At the end of the month, the daily order count reached 23,000.
X5 Retail Group​ has announced that it is to roll out its Perekrestok.Express service in 46 supermarkets, from nine before​, so that it covers all of Moscow. The average delivery time is one hour and there are 400 orders per day (with an average of 14 items and a ticket of RUB2,100). No minimum order is required, while the assortment ranges between 9,000-14,000 SKU, depending on the store. The order is assembled by in-store personnel, while the delivery is made by a specialised grocery delivery service.
X5 Retail Group​ has agreed with Rait chain, present in the Urals and the Volga region, to acquire long-term lease rights to the latter's properties. These include 21 locations, with 33,000sqm of selling space. Fifteen stores are located in the Sverdlovsk region, three in Tyumen, two in Bashkortostan and one in the Khanty-Mansiisk autonomous district. The full integration of these premises is to be completed by August 2020, and is to double Perekrestok's selling space in the Sverdlovsk region. The stores are to be served through the DCs in Yekaterinburg and Samara. Delivery.Pyaterochka was launched in St Petersburg, in the central districts of the city. Complete city coverage is expected by the end of May. The acquisition of Rait’s premises is in-line with the company's strategy for combining organic growth and tactical M&As, such as leasing large clusters of available properties. The deal implies 2.5% and 4% growth in the store base and selling space, respectively, for the Perekrestok format, but in terms of the whole group it is insignificant (less than 1% of both space and store base). As for the express delivery service from convenience outlets, it has been rolled out since January 2020, and recently covered 176 stores in Moscow and Kazan. Starting up in St Petersburg is a further
115​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com