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Analysts said whether to invest in shares of Russian developers




MOSCOW, 8 Apr – PRIME. Shares of Russian developers look attractive against the backdrop of good financial performance, according to experts interviewed by RIA Novosti. They assessed the securities of PIK Group, LSR Group, Samolet Group and Etalon Group of Companies and estimated their value at the end of 2021. Examples of questions for testing private investors have become known. The leader in terms of current market capitalization among these companies is Group of Companies “PIK” (610.366 billion rubles), followed by GC “Samolet” – 91.913 billion rubles and GC “LSR” – 87.225 billion rubles, according to the data of the Moscow Exchange. The market capitalization of Etalon Group on the London Stock Exchange is estimated at 327.33 million pounds (35.157 billion rubles). As follows from the data of the Moscow Exchange, in the first quarter of 2021, shares of PIK Group of Companies increased by 57%, to 937 rubles, Samolet – by 31%, to 1251.8 rubles, shares of LSR fell by 4.5%, to 828 , 6 rubles, “Etalon” – by 1.6%, to 122.5 rubles. Thus, the best results are shown by the shares of PIK Group. According to the materials of the Moscow Exchange, since mid-March, these securities have risen in price by more than 30%. Shares of PIK Group of Companies were in demand after the publication of positive annual financial results of the issuer under IFRS, said Vitaly Manzhos from IC Algo Capital. The net profit of the largest Russian developer of residential real estate in 2020 increased by 91.7% and amounted to 112 billion rubles. Such a strong result was made possible thanks to the launch of mortgage programs with a low preferential rate of 6.5% per annum, explains Manzhos. Investstrateg named the worst financial advice Shares of developers were among the growth leaders in the market, says Georgy Vaschenko of Freedom Finance. “Quotations of PIK Group of Companies for the year rose from 400 to almost 900 rubles. Before the mortgage crisis of 2008, securities were traded at around 900 rubles per share, last fall, quotations recovered after falling to 500 rubles,” he says. The residential real estate market in Russia has been on the rise in the past two years, says Alexei Pavlov from Otkritie Broker. Developers’ shares are doing well in a favorable market, while the undisputed leader of the industry – PIK Group – only increases the gap from competitors, the analyst notes. “So, at the end of 2020, the company increased its revenue by 35%, and EBITDA – by 62%. In the current year, according to the management forecast, PIK’s revenue may increase by another quarter, and then EBITDA will add another 40-50%,” – he points out. The potential for growth in the securities of PIK Group remains, given the relatively low current market valuation of the issuer, Pavlov is sure. Real estate prices remain high, which supports the financial results and quotes of developers’ shares, said Dmitry Puchkarev from BCS World of Investments. At the end of 2020, PIK, LSR, Etalon presented good reports, he points out. Samolet GC has not yet published its IFRS results, but the indicators are expected to be strong, the analyst is sure. The expert predicted investors’ rejection of bitcoin FORECASTS Puchkarev from BCS World of Investments evaluates the medium-term prospects for shares of construction companies as moderately positive. “The situation is favorable, the preferential mortgage program will support demand in the second quarter. Interesting securities are LSR and Etalon – both of these companies are attractive in terms of dividends,” the analyst believes. The investment attractiveness of Etalon Group is primarily due to the relative cheapness of the developer, as well as the generous dividend policy promising shareholders to pay at least 12 rubles per share annually, suggests Pavlov from Otkritie Broker. Plus, behind the back of the Etalon Group there is a powerful financial conglomerate AFK Sistema, which is always capable of providing real support to the developer, he emphasizes. The Samolet Group of Companies is also an interesting long-term investment history, Pavlov said. The developer is at the beginning of a tremendous leap forward, which should multiply the scale of the business, the expert believes. In 2021, the analyst predicts an increase in business profitability associated with economies of scale. “Thanks to the launch of new projects, as well as new queues in old projects, already in 2022, an almost threefold increase in the group’s sales in physical terms is expected compared to 2020,” Pavlov predicts. So far, interest in securities may be restrained by relatively low liquidity – today only 5% of shares of Samolet Group are in free circulation, but in a year the developer intends to conduct a secondary placement of shares, increasing the share of securities in free circulation to 30-40%, the analyst recalls. The developers’ shares, previously a good speculative idea and protection during the shock of taking measures to support the mortgage, now look overbought in the medium term, said Vaschenko of Freedom Finance. The companies recently submitted their financial statements for the past year, PIK sales grew stronger – by 35% versus 7% at LSR, he recalls. “There may be a chill in developer shares in the second quarter, investors will be willing to fix profits. In case of correction, LSR shares can be supported by the level of 700 rubles, PIK – 760 rubles,” Vashchenko predicts. Shares of PIK Group clearly look overbought, in the coming months they will hardly be able to go much higher than their April record value, believes Manzhos. It assumes a target range until the end of 2021 for securities of 800-1000 rubles. The analyst predicts the value of a share of PIK Group at the end of the year to be about 900 rubles. The beginning of a landslide. Where will investors go when markets start to fall? Shares of LSR Group, amid all the optimistic news and expectations, were unable to exceed the psychologically significant level of 1,000 rubles, Manzhos points out. “They look noticeably weaker than PIK securities, but at the same time they have already completely relieved their medium-term overbought. Oddly enough, they coincide in levels with the indicated securities. Perhaps, they were thus” leveled “by large players trading in pairs of shares,” he notes … The analyst calculates the target range until the end of 2021 for LSR securities is also 800-1000 rubles. At the same time, he predicts the share price at the end of the year in the region of 900 rubles. Puchkarev estimates the fair range at the end of the year for LSR at 900-1000 rubles, for PIK – 850-1000 rubles, for GC “Etalon” – 115-140 rubles, for GC “Samolet” – 1200-1500 rubles. Vaschenko calls the target fair price for LSR shares at the end of the year at 1151.44 rubles, PIK – 876.33 rubles, Etalon – 151.4 rubles, and Samolet – 1132.23 rubles.

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