The PIK group has released its operating results for 1H 2008. The report says the company's total land reserves rose by more than 39% in the period. According to an estimate made by independent valuer CBRE, the total unsold area added to the company's project portfolio amounted to 5.6 million square meters, and is estimated to be worth USD 1.66 billion. As a result, the company's portfolio has grown in value by over 13.5% to USD 13.96 billion since January 1, 2008.
Table. PIK group: basic indices for 1H 2008, USD mn
| Indicator | Land property portfolio as of January 1, 2008 | Increment in 1H 2008 | Land property portfolio as of January 1, 2008 | Increment in 1H 2008 |
|---|
| | Mn sq m | Mn sq m | USD, bn | USD, bn |
| Moscow | 1.6 | 0.1 | USD 5.2 | USD 0.17 |
| Moscow region | | - | USD 4.9 | - |
| Russian regions | 7.4 | 5.5 | USD 2.2 | USD 1.49 |
| | 14.2 | 5.6 | USD 12.3 | USD 1.66 |
Source: company data, Finam estimates
We are upbeat about the rapid growth in the company's land reserves and the rise in the total value of its portfolio, as shown by the independent valuation. The company's strong foothold on regional markets should enable it to further expand its project portfolio as land assets in the regions grow in value. For all that, the possible risk that demand for residential housing will slow, especially in regional markets, should also be taken into account. However, the company's preliminary report on its cash receipts in the reporting period instills optimism, and the reported figures reduce the risk of a fall in the company's revenue in the mid term.
We expect the publication of the group's 1H 2008 financials in late September or early October. We view the forthcoming release of financial data as a significant event, capable of boosting the appeal of the company's shares.
According to our estimates, the fair price of PIK shares should be USD 32.2 per share, with an upside potential of 85% to the current stock valuations.
0.569
0.073
