OREANDA-NEWS. July 09, 2010. PIK published a 6M10 operating update, revealing an increase in pre-sales. New home retail pre-sales increased 531% YoY in value terms for 6M10. Average pre-sales stood at RUB1.16bn/month versus RUB0.18bn/month for 6M09. In June 2010, approximately 9% of pre-sales were mortgage sales (vs. 3% in June 2009). Pre-sale activity is still about two times lower than the pre-crisis level, reported the press-centre of OTKRITIE Financial Corporation.

View: The results clearly reflect some recovery in demand for mass market housing. We see two main reasons for increased activity on the economy residential market - pent-up demand from those customers who deferred buying apartments during the crisis, and increasing mortgage availability. Overall, the news is positive for PIK.

Valuation and Action: The stock currently trades at a 2010 P/S of 1.2x, which is a 33% discount to Russian peers. At present, we do not cover the stock.