"PIK is a specialized developer" (MCX: PIKK) — Russia's largest real estate company, significantly outperforming competitors in terms of the volume of current construction and housing commissioning.
About company
In reporting, the company identifies five operating business segments.
Development and construction. To 2021 года компания считала девелопмент и строительство двумя отдельными сегментами, and now combined them into one. This includes the main activities of PIK SZ for the construction and sale of residential buildings, infrastructure and commercial real estate, integrated development of territories. Most of the construction is carried out by the company in the Moscow region, there are also projects in St. Petersburg, Kaluga, Yekaterinburg, Yaroslavl and others - in total 14 regions. Basically, PIK SZ builds residential buildings in the mass segment.
The company is also engaged in contract construction services - the so-called fee development. That is, the owner of the land hires PIK SZ under a contract for construction work.
Exploitation. The company is engaged in real estate management in 20 regions of Russia through the country's largest management company PIK-Comfort. Общая площадь домов под управлением — более 50 million square meters. This is a completely different business format compared to the "development and construction" segment - it brings regular revenue from the same facilities..
Industrial segment. The company manufactures building materials and components for construction, IoT devices, assembles panel buildings.
Proptek. The company provides repair services, rental, purchase and sale of real estate in the secondary market.
Other activities. Other activities, e.g. rental services.
Vertically integrated company: itself develops construction technologies, manufactures parts at house-building factories, used in construction, builds, sells, manages ready-made houses. The structure of revenue shows, that she earns the vast majority of her money from development and construction.
Despite the size of the business, its performance is constantly growing: PIK SZ sells more and more real estate in kind, as well as in terms of money. The same dynamics is observed under fee development agreements.
The vast majority of real estate is sold in the Moscow region: по итогам первого полугодия 2021 года на его долю пришлось 87% in kind and 93% - in value. It is worth noting, that the share of mortgage transactions is constantly growing and has already reached 79%.
PIK SZ has the largest land bank in Russia, which has grown significantly in the last couple of years., which gives the company the opportunity to launch several new projects every year, вводить десятки новых корпусов суммарной площадью близкой или даже превышающей 2 million square meters.
The best way to see the development of the company is the dynamics of assets: за последние четыре года они выросли в четыре раза — до 917 billion rubles.
Number of new projects, buildings and their area by years
| Number of new projects | Number of new buildings | Area of new buildings, million m² | |
|---|---|---|---|
| 2018 | 13 | 102 | 2,5 |
| 2019 | 3 | 85 | 1,8 |
| 2020 | 18 | 92 | 2,0 |
| 1п2021 | 9 | 69 | 1,2 |
Объем текущего строительства и ввода жилья за 2021 year of the largest developers in Russia, million m²
| Current construction volume | Housing commissioning volume | |
|---|---|---|
| PIK SZ | 6,0 | 1,2 |
| "LSR Group" | 2,9 | 0,3 |
| "Airplane" | 2,2 | 0,4 |
| Setl Group | 1,9 | 0,5 |
| FSK | 1,3 | 0,3 |
Объем реализации недвижимости и сумма по договорам по регионам за первое полугодие 2021 of the year
| Volume of sales | Amount under contracts | |
|---|---|---|
| Moscow | 57% | 69% |
| Moscow region | 30% | 24% |
| St. Petersburg | 3% | 3% |
| Regions | 10% | 4% |
Структура выручки компании по операционным сегментам за первое полугодие 2021 of the year
| Development and construction | 81% |
| Exploitation | 7% |
| Industrial segment | 9% |
| Proptek | 2% |
| Other activities | 1% |
81%
The volume of real estate sales and the amount under contracts by year
| Volume of sales, thousand m2 | Amount under contracts, billion rubles | |
|---|---|---|
| 2017 | 1839 | 189,9 |
| 2018 | 1941 | 210,6 |
| 2019 | 1836 | 223,8 |
| 2020 | 2085 | 292,2 |
| 1п2021 | 890 | 146,5 |
The volume of real estate sales and the amount under fee-development agreements by years
| Volume of sales, thousand m2 | Amount under contracts, billion rubles | |
|---|---|---|
| 2018 | 49 | 6,1 |
| 2019 | 120 | 16,5 |
| 2020 | 270 | 48,4 |
| 1п2021 | 198 | 42,5 |
Share of mortgage transactions by years
| 2017 | 60% |
| 2018 | 65% |
| 2019 | 66% |
| 2020 | 76% |
| 1п2021 | 79% |
60%
Land bank of the company by years, million m²
| 2017 | 12,0 |
| 2018 | 11,0 |
| 2019 | 11,1 |
| 2020 | 16,5 |
| 1п2021 | 21,5 |
12,0
Valuation of the company's assets by years, billion rubles
| 2017 | 225 |
| 2018 | 382 |
| 2019 | 608 |
| 2020 | 917 |
225
History and share capital
The company was founded in 1994 году Юрием Жуковым и Кириллом Писаревым как «Первая ипотечная компания». In the 2000s, several factories for the production of building materials and components for construction were acquired. IN 2007 year the company went public, its securities began to be traded on the exchanges of Moscow and London.
Мировой финансовый кризис 2008 года тяжело ударил по компании, итогом чего стала потеря контроля над ней основателями в 2009 year. Suleiman Kerimov became a major shareholder. But in 2013 году он продал свою долю, and the structures of Sergey Gordeev became major shareholders, Alexandra Mamut and Mikaila Shishkhanov.
IN 2016 году компания значительно увеличилась, having bought a competitor - the Morton company - from Sergey Gordeev, who had bought it shortly before, which is still in 2014 году стал президентом и председателем правления ПИК. And in 2017 году он получил контроль над компанией, having redeemed shares of Alexander Mamut and Mikail Shishkhanov. Its share in the share capital exceeded 74%.
In the same 2017 году компания выкупила свои глобальные депозитарные расписки (GDR), by delisting from the London Stock Exchange, and then sold the GDR package, corresponding 7,6% share capital, VTB Bank. At the same time, a non-deliverable financial instrument was concluded, which we talked about above. IN 2019 году ВТБ увеличил долю в компании в три раза.
In this way, по итогам первого полугодия 2021 года у компании есть контролирующий акционер — глава компании Сергей Гордеев; a major minority shareholder represented by VTB Bank; yet 17,62% shares are in free float.
In March 2021 года компания немного переименовалась: changed its name from "PIK Group of Companies" to "PIK - Specialized Developer", and the position of the head of the company changed from president to CEO.
А в самом начале октября 2021 года компания провела SPO — вторичное размещение акций, продав около 28,5 млн ценных бумаг за примерно 36 billion rubles. Из вырученных средств 11,6 млрд рублей планируется потратить до конца месяца на выкуп ГДР у банка ВТБ, the rest - to pay off debt and expand business. At the same time, the number of shares in free float should increase.
Структура акционерного капитала компании по итогам первого полугодия 2021 of the year
| Sergey Gordeev | 59,33% |
| VTB | 23,05% |
| In free circulation | 17,62% |
59,33%
New points of growth
PIK SZ does not rest on its laurels of leadership in the industry: the company not only increases the volume of construction, but also tries to engage in related areas to further increase the business and diversify it.
International expansion begins. The first project is a 30-storey business class building in the center of the capital of the Philippines, Manila. More projects are emerging in India.
New brands. New Forma and Mono brands for residential business introduced- and premium.
New segments. It is planned to enter completely new segments for the company - the construction of country houses and industrial parks.
Modular construction. The company is actively developing modular construction technologies. It is planned to launch factories in Moscow, St. Petersburg and Manila, which modules will produce. Their use is expected to reduce the cost, improve quality and significantly reduce construction time. В начале октября 2021 года компания собирается начать строительство первого девятиэтажного дома по этой технологии с ожидаемой продолжительностью сборки всего лишь две недели. PIK SZ outlined such an ambitious goal in a presentation for investors, как мировое лидерство компании в области модульного строительства к концу 2023 года с долей 20% и объемом возводимой недвижимости с использованием этой технологии 2 million square meters.
New service. Launched Kvarta service - technology platform for customers, as well as for other developers. It's an ecosystem, combining the convenience of digitalization, many services and marketplace. Supposed, that with its help customers will be able to buy and rent apartments, and small developers - to receive a full package of services, in particular project finance, as well as the possibility of selling apartments at low cost. Service's ambitious goal is to share 25% рынка первичной продажи жилья к 2025 year.
Financial indicators
At first sight, the company's revenue and net profit show excellent growth momentum. But if you look closely at the financial statements, it will turn out, that the company has non-deliverable financial instruments, the value of which is regularly revalued depending on share prices. And since prices have been on the rise lately, then there are financial gains, which somewhat distort the net profit. If corrected for this, the dynamics will still be great, но будет наблюдаться некоторое падение чистой прибыли по итогам первого полугодия 2021 of the year.
The company's net debt is also growing, which is not very good, but understandable, since PIK SZ invests a lot in business development.
Financial results of PIK SZ by years, billion rubles
| Revenue | Net profit | Adjusted net income | net debt | |
|---|---|---|---|---|
| 2017 | 175,1 | 3,15 | 3,15 | 15,0 |
| 2018 | 245,8 | 21,3 | 18,1 | 3,65 |
| 2019 | 280,6 | 45,1 | 42,0 | 73,3 |
| 2020 | 380,2 | 86,5 | 64,7 | 135,5 |
| 1п2021 | 189,3 | 69,4 | 13,5 | 284,6 |
Dividends and dividend policy
IN 2017 году была принята дивидендная политика компании, according to which it was planned to pay dividends every six months in the amount of at least 30% net cash flow from operating activities. But in reality, the company paid a fixed amount for several years in a row. 22,71 P per share once a year.
IN 2021 году компания приняла новую дивидендную политику с похожей формулой выплат: twice a year at least 30%, but now - from net income under IFRS, adjusted for non-monetary income.
In May 2021 года были объявлены дивиденды сразу за 2020 год и первый квартал 2021 of the year, The total amount was almost double, than usual, — 45,22 P per share. The dividend yield of this "double" payment was about 4,5%.
Company dividends, rubles per share
| 2017 | 22,71 |
| 2018 | 22,71 |
| 2019 | 22,71 |
| 2020 | 22,51 |
| 1к2021 | 22,92 |
22,71
Why stocks can go up
Growing industry leader. PIK SZ business is actively developing in all areas: the volume of real estate sales is growing as in square meters, as well as in rubles, increasing diversification by segments and geography of construction. Innovations are being introduced to make it cheaper and faster. New growth units emerged, which in the future may even be brought to an IPO.
The company's share price has risen significantly in recent years., but this is largely just a reflection of the operational and financial success of the business. Yes, the company is trading at the multiple P / E more expensive, than a couple of years ago, and more expensive than most competitors, but in general this reflects the high efficiency of PIK SZ business, its industry leadership and outlook.
Possible positive from SPO. The conducted SPO brings several potential benefits to PIK SZ. Firstly, part of the proceeds will be used to pay off the debt, grown a lot lately.
Secondly, this should increase the liquidity of the shares by having more of them in free float. In addition, back in August, the company was called a candidate for inclusion in one of the main stock indexes for Russian shares MSCI Russia, after the SPO, the likelihood of this increased even more. The fact of inclusion may also be positive for the company's share price.
Commencement of compliance with dividend policy. If PIK SZ begins to regularly comply with its dividend policy, this will increase the transparency of the company and the predictability of the amount of dividends for its shareholders, which will increase its attractiveness and may become another reason for the growth of quotations.
Why stocks might fall
Deteriorating business environment. IN 2020 году и первой половине 2021 года в строительной отрасли была крайне благоприятная конъюнктура: historically low value of the key rate of the Central Bank of the Russian Federation, introduction of government subsidized preferential mortgages, increased demand for housing due to the emergence of a large number of people in the remote work format. All this led to a strong increase in home sales and prices for it..
Seems, that the conjuncture has reached its climax and now it will only get worse, - and this assumption has several premises at once:
- increased inflation reduces the real disposable income of the population and makes housing less affordable;
- due to inflation, the costs of developers for building materials and wages increase. As a result, the margins of the business will decrease, or when shifting price increases to the end buyer, demand will suffer;
- in order to curb inflation, the Central Bank of the Russian Federation began to raise the key rate: если большую часть 2020 года она была на уровне 4,25%, то в сентябре 2021 года она была поднята уже до 6,75%, and this is not the limit. And this is, in its turn, the reason for the increase in interest on loans and mortgages in particular;
- preferential mortgage program extended, but on less favorable terms.
And along with the deterioration of the market situation, the financial performance of developers and, in particular, PIK SZ may suffer, which will negatively affect prices.
Possible problems with new lines of business. The company is actively developing new business areas, diversifies it. If everything goes well, then it will be a good help for the company, but there are risks: maybe, the company will not be able to realize its ambitious plans, and large investments will only result in losses.
Мультипликаторы публичных российских девелоперов за первое полугодие 2021 of the year
| P / E | ROE | Net Debt / EBITDA | |
|---|---|---|---|
| PIK SZ | 16,0 | 24,6% | 2,36 |
| "LSR Group" | 5,04 | 16,2% | 1,88 |
| "Airplane" | 115,6 | 27,9% | 7,30 |
| "Reference" | 8,56 | 8,1% | 0,90 |
PIK SZ multipliers by years
| P / E | ROE | Net debt / EBITDA | |
|---|---|---|---|
| 2017 | 67,4 | 5,8% | 1,11 |
| 2018 | 11,7 | 27,2% | 0,09 |
| 2019 | 5,89 | 41,3% | 1,09 |
| 2020 | 18,2 | 26,4% | 1,21 |
| 1п2021 | 16,0 | 24,6% | 2,36 |
Eventually
PIK SZ is the leader of the Russian construction market. The company's business is growing steadily, followed by rising financial indicators and share prices. Good conjuncture in the real estate sector over the past year and a half has played a significant role in this..
The company does not stop there: looking for new points of growth and business diversification, increases the number of shares in free float, adopts a new dividend policy. However, the industry environment, probably, passed its peak, and investments may not give results and become just a waste of money.
I would like to pay particular attention to, that PIK SZ shares do not correlate with the market, what can be seen from the value of the beta coefficient, equal to 0,02.