Real Estate/Homebuilders - 2Q17: Still Slow, but Improving
Homebuilders will start reporting 2Q17 operating results next week. The market remained challenging during the quarter, marked by persistent oversupply in both Moscow and St Petersburg and heightened competition among developers. Consumers remain price-sensitive, especially given such a wide choice of projects with improved quality and attractive offers. Nevertheless, we expect y-o-y improvements across the entire industry, not just the public players, though obviously with some degree of variation. In terms of presales, we expect PIK Group to continue delivering the highest growth (90%) following the consolidation of Morton. Etalon Group (19%) should recover from a drop in the previous quarter and take second place in growth terms, while LSR Group is likely to lag for an eighth quarter in a row. With LSR Group continuing to face challenges, Etalon Group remains our top pick in the sector thanks to its project diversification and improving FCF and dividend yield outlook.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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