Battening down the hatches
​Raven Russia's defensive moves over the past 18 months have prepared the company for the storm now hitting the Russian economy and left it well placed to benefit once economic conditions normalise. Contracted revenue is a strong defence against pressure on rental levels in the Moscow area, while the company has existing cash resources of $247m, equivalent to 22.6p per ordinary share. The interim results, announced last Thursday, showed a drop in revenues in US dollar terms of 10%, feeding straight through to the bottom line, which is relatively modest against a background of economic strain. Our estimates show property revenues almost holding steady in the current year, but dropping by 7% in 2016, with pre-tax falling by 6% this year and by 13% in 2016. The company's financial position is currently robust, and it is a reasonable bet that it will emerge from the current period of uncertainty in a strong position. We have, however, conservatively reduced our target price for the ordinary shares to 55p per share, still materially above the present price of 43p. Our fair value for the prefs remains at 160p per share.
Raven Property Group is a property investment group focusing on commercial real estate in Russia. Co. has three operating segments: Property Investment, which acquires, develops and leases commercial property in Russia; Roslogistics, which is engaged in the provision of warehousing, transport, customs brokerage and related services in Russia; and Raven Mount, which sells residential property in the U.K.
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