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Singapore-listed HPL is tapping the SGD market with a five-year senior unsecured bond. Bondsupermart provides a brief commentary on the new bond.

Preliminary statistics for April released by Rosstat indicate that retail sales were strongly down, both m-o-m and y-o-y – by 28.5% (not seasonally adjusted) and by 23.3%, respectively. The 4M20 tally fell by 2.8% y-o-y. A very deep contraction was generally expected, but the published figures seem to be not immune to certain questions. Food retail sales (including drinks) reportedly contracted by 15.2% m-o-m and by 9.3% y-o-y. The contraction in the non-food segment was much deeper (41.0% m-o-m and 36.7% y-o-y). Putting these numbers together with production statistics, particularly in the food segment, raises a question about the reliability of these numbers, as Rosstat also reported that food production in April was up 3.7% y-o-y. Whenever the ruble falls, as happened in April 2020, and imports contract significantly, the share of domestically produced and consumed goods goes up, but the consumption basket is taken from some previous year when the share of imported goods was higher. Therefore, structural shifts on the consumer market remain unnoticed for the time being. On top of that, some food sales may have been either miscalculated or simply underestimated due to significantly increased online food purchases and food delivery, which may not have been captured by Rosstat. Instead of the officially reported 9.3% y-o-y drop the decline in food retail could have been no more than 4% or so. Based on April statistics, it looks as though GDP is going to contract by around 8% y-o-y in 2Q20 if to adjust food retail in the aforementioned way. A similar 8% y-o-y contraction can be expected in 3Q20 as well, while in 4Q20 the figure will be around 6%, potentially resulting in some 4-6% contraction in 2020 as a whole. This number does not differ much from GKEM Analytica's earlier projections. --- Given a reported deep decline in retail sales in April the base effect of this decline will be felt during the entire 2020 and in early 2021. In 2020, retail sales may fall by 15-17% if to stick to the numbers published by the Rosstat in April. However, to adjust food retail as was suggested by GKEM Analytica, the decline of total retail sales may be limited by 8-10% in 2020. --- Food retail and consumption cannot in principle look like “V” as it is quite unlikely that the nation (not selected individuals) will suddenly start eating 15% more food next month or some other month later, i.e. to offset the 15% m-o-m drop in April. Hence the L-shape recovery of food retail is more likely. That being said, the overreported m-o-m drop in April’s food retail will have a much greater base effect on the full year numbers than the non-food retail. Non-food market may in principle resemble a kind of a V-shape performance. --- Performance in several sectors in April looked better compared to retail. Agricultural output increased by 3.1% y-o-y in April which kept the 4M20 tally up 3.0% y-o-y. The output in the freight transportation sector fell by 3.1% m-o-m and by 7.2% y-o-y. Construction activity declined by 2.3% y-o-y in April having posted 6.5% m-o-m growth (not seasonally adjusted). The 4M20 tally was up y-o-y by 0.1%. --- Inflation in Russia is seen to remain slightly above 3% by year-end and is not going to accelerate much in due course as demand will remain subdued, which may encourage the CBR to continue its series of rate cuts. GKEM Analytica reports have become paid starting Jan 1, 2020. To receive full-text report, please contact us at research@gkem-analytica.com