Research Notes

In late March all of the operational restrictions on Glavmosstroy shares were lifted. The company is one of the leaders in the Moscow housing construction market, with market share more than 10%. The company is aggressively expanding into the regions. Given the ongoing government led housing programs and the support provided to the company by its majority shareholder Glavstroy, we expect the company to maintain its robust business growth rates in upcoming years. We highlight the following key factors:

• The company's strong position in Moscow's high-margin construction market.
• The company's projected growth rates exceed the average pace of growth in the market. The management plans to double the current construction levels in coming years.
• An expansion of high-margin residential housing construction combined with stable level of municipal projects construction volume.
• The strong demand for housing in Moscow and the Moscow region secures prices in the company's key markets.
• Active regional expansion enables the company to capitalize on rapid growth in the regional construction sector.
• Glavmosstroy is a unique opportunity for portfolio investors to participate in the fast growing residential housing segment.

In line with our estimates, we assign BUY recommendation to Glavmosstroy common shares, with a target price of USD 392 per share and an upside of 79%.

Vladimir Sergievskiy

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