Sector: Development
We are upbeat on PIK Group's 1H 08 operating results and believe they could lend support to the company's stock valuations in the mid-term. In our opinion, the increase in the company's geographic range, its positions on the regional markets and high revenues from residential property sales in Moscow Region and other regions of Russia should outweigh any possible risks related to a slowdown in residential property sales on the Moscow market.
PIK Group has released its 1H 2008 operating results. The company almost doubled its y-o-y revenues from sales of residential property and development rights to USD 1.26 billion. Nearly 80% of income came from sales on the primary residential market.
Table. PIK: Key Financials 6M 2008, USD million
| | 1H 2007 | 1H 2008 | Change 1H2008/1H2007 |
|---|
| Total sales revenues | 611 | 1,263 | 106.7% | | including: | | | | | sales and pre-sales of residential property | 510 | 1,005 | 97.1% | | sales of development rights | 101 | 258 | 155.4% |
Source: company data, Finam estimates
Table. PIK: Structure of cash inflows by regions, USD million
| | 1H 2007 | 1H 2008 | Change 1H2008/1H2007 |
|---|
| Revenues from sales and pre-sales of residential property | 510 | 1,005 | 97.1% | | including: | | | | | Moscow | 324 | 221 | -31.8% | | Moscow Region | 123 | 513 | 317.1% | | other regions of Russia | 63 | 270 | 328.6% |
Source: company data, Finam estimates
We are positive about the company's operating results for 1H 08 and believe they could lend certain support to PIK stock valuations. Moreover, we note a steady upturn in the developer's revenues from sales of residential property in Moscow Region and other regions of Russia, which stand for nearly 78% in the company's total revenue. This is a result of the rapid growth in prices for residential property in the regions, which has offset a slowdown in residential property sales on the Moscow market. Among the company's competitive advantages, we highlight its ability to get cash advances in the initial phases of construction and perform pre-sales of residential property, which allows PIK to accumulate considerable volumes of money.
In line with our estimates, the fair value of PIK Group is USD 34.8 per share, an upside of more than 90% to 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
