Page 117 - RusRPTFeb19

the appearance of the middle class at the end of the decade its business model became side-lined and it faced increasingly strong competition from bigger local operators. PPF Real Estate is one of the most active foreign investors in the Russian real estate market. Among its projects are the Comcity business park (185,000sqm), the Southern Gates warehouse complex, and half of the office part of the Metropolis complex.
Russian real estate developer Etalon Group reported record fourth quarter results and beat its guidance, Sberbank CIB said in a note. Etalon reported that residential volumes and sales were up 30% y/y and 47% y/y, respectively. “The company outperformed the impressive market trends, driven by clients’ demand for housing prior to legislative adjustments and by the outlook for rising mortgage rates. Annual figures broke records for volumes (628,000sqm) and value (RUB 68.7bn), outperforming management’s guidance and our model by 10-20%,” Sberbank CIB said. Etalon reached a net cash position of RUB2.2bn ($33mn) by the end of the year and Sberbank estimates that 2018 free cash flow was unmatched at RUB15.5bn. “Although it was supported by low land purchases, we think this points to a modest stock valuation, in comparison with the market capitalisation of RUB 33bn, and to a robust dividend outlook,” Sberbank CIB said. During the quarter, Etalon sold 211,356sqm of housing for RUB24.4bn, implying y/y growth of 30% and 47%, respectively. The pace was comparable q/q and supported by the impressive market trends. The average price for apartments increased 13% y/y on a comparable mix, construction stage, and the share of parking (some 15% in volumes). The inventory of completed but unsold units shrunk to 115,000sqm, from 195,000sqm at the beginning of 2018. “In 2018, sales reached 628,000sqm and RUB 68.7bn. Both are record highs for the company, and came 10-20% above management’s guidance and our estimates. We estimate Etalon’s portfolio at 2.3mn sqm at YE18 and see the reported sales as almost at the true operational potential. On the annual figures, we also anticipate the company outperforming the broader primary market in Moscow and St Petersburg,” Sberbank said. “Impressive cash flow. Etalon released a net cash position of RUB 2.2bn at YE18 vs. net debt of RUB9.7bn at the beginning of the year. Taking into account the RUB 3.6bn dividend payment in 2018, we calculate free cash flow at RUB 15.5bn (also a record performance). Although the figure reflects minor land acquisitions last year, the strong cash flow generation points to a robust FY18 dividend outlook (with a potential announcement in April) and we note that the the first half of 2018 dividends were missed because of the IFRS net loss reported,” the bank added. The stock has not been performing as well and is down 46% over the last 12 months and now trades on P/NAV of 0.3x (vs. 0.4x for rivals LSR and 1.1x for PIK).
Russian supermarket chain Lenta has commissioned the largest ever “built-to-suit” warehouse complex, Vedomosti reported on January 15. PNK Group will build two logistics complexes for the company with a total space of 100,000sqm, Vedomosti reported citing two people close to the deal. Construction has already begun. The first warehouse of 70,000sqm is located in the logistics park PNK Park Valischevo in the Moscow region. The second is located at PNK Park Tolmachevo, 13 km from Novosibirsk. Lenta is Russia’s third largest retail after market leaders Magnit and X5 Retail Group. At the end of September the company earned revenues of RUB294bn, managed 233 hypermarkets and 115 supermarkets in St. Petersburg, Moscow and the regions. Lenta is expanding its warehouse infrastructure primarily for those categories where storage temperature is important: vegetables and fruits, fresh and frozen products, the company said. The new warehouses will allow the
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