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We are positive about PIK Group's financial results for FY 2007, which show a steady high growth of financials together with an increase in margins. In our opinion, an upturn in the land bank and a build-up in the company's projects portfolio would help it to preserve high rates of development, including on regional markets.
PIK Group, the leading Russian residential property developer, released Monday its audited financial results for FY 2007. In line with the company's announcement, PIK's revenue in FY 2007 rose by more than 74.8% to USD 2.7 bn.
Table. PIK: Key Financials FY 2007, USD mn
| Indicator | 2006 | 2007 | 2007/2006 |
|---|
| Revenue | 1,546.0 | 2,703.0 | 74.8% | | Cost of production | 1,186.0 | 2,005.0 | 69.1% | | Gross profit | 360.0 | 698.0 | 93.9% | | Gross margin | 23.3% | 25.8% | | | Executive expenses | 56.00 | 122.00 | 117.9% | | Operating profit | 449.0 | 912.0 | 103.1% | | Operating margin | 29.0% | 33.7% | | | EBITDA | 486.0 | 939.0 | 93.2% | | EBITDA margin | 31.4% | 34.7% | | | Net profit | 298.0 | 700.0 | 134.9% | | Net margin | 19.3% | 25.9% | |
Source: company data, Finam estimates
We are upbeat about the company's financial report for FY 2007. Ongoing demand for residential property in Russia and the company's capabilities to build up its implemented projects portfolio should boost PIK Group's incomes in the mid-term. As a result of the revaluation of the company's real-estate portfolio performed by the independent valuator CB Richard Ellis, as of 1 January 2008, the value of the company's project portfolio grew by 40% to USD 12.3 mn (USD 8.8 mn on January 1, 2007). This could also lend support to the company's stock valuations, in our view.
In line with our estimates, the fair value of PIK Group's shares is USD 39.5 per share, a 42% upside on the current market valuation. Sergey Filchenkov
Other comments of the day
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PIK
Capitalization: $584 013 291,52
Common shares:
Price: $1,28
Delta week: -72,9%
Delta month: -65,0%
Delta year: -95,7%
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0.569
0.073
