Etalon Group - Sales Improve in 2Q17
After dipping in 1Q17 on a tough comparison base, Etalon Group's presales growth returned to positive territory in 2Q17. This was driven by new terms with agencies to incentivize sales of Etalon Group's projects and also by more proactive use of mortgage financing by buyers, which, along with the selling down of inventory this year, should help generate additional operating cash flow, potentially increasing the dividends. We adjust our 2017 earnings forecasts to reflect fewer completions, but we keep our target price unchanged at $4.70 per share, which offers 25% upside. Etalon Group remains our preferred name in the sector thanks to its superior presales growth outlook, improving cash flows and rising dividend yield.Etalon Group is a real estate development and construction company. Co.'s principal activity is residential development in Saint-Petersburg metropolitan area and Moscow metropolitan area, the Russian Federation. Co. has three reportable segments: Residential Development, which includes construction of residential real estate including flats, built-in premises and parking places; Constructions Services, which includes construction services for third parties and for internal purpose; and Other Operations, which include selling of construction materials, construction of stand-alone premises for commercial use and various services related to sale and servicing of premises.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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