BGC Partners - Kardemir Karabuk Demir Celik Sanayi ve Ticaret A.S. D (KRDMD) BGC PARTNERS - KARDEMIR TP REVISED UPWARDS (BUY MAINTAINED)

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BGC Partners

Erdem Hafizoglu

EUR 228.00 For Business Accounts Only

BGC PARTNERS - KARDEMIR TP REVISED UPWARDS (BUY MAINTAINED)

KRDMD - TP UPPED BY 22% TO TL5.00/SHR: Our new TP indicates 32% upside potential, and the stock remains one of our top picks for 2018. Based on our 2018 estimates, KRDMD trades at P/E of 7.0x and EV/EBITDA of 4.7x, at 24% discount to our peer set. Note that 2017 has been negatively affected by problems in coking coal shipments and weak steel prices at the beginning of the year. In the absence of such problems and thanks to the uptrend in steel prices, we raised our EBITDA margin assumption to 24.7% for 2018 (company guidance 23-25% which is conservative) from 20.7% (4Q17 EBITDA margin was 26.3%). Especially in 1H18, margins should be stronger (the company almost closed the first half given its 2-month order book). Indebtedness, short FX position, fluctuation in steel and raw material prices, risks regarding Turkeyâ€™s GDP growth and China and USâ€™s actions in steel market are the main risks.

12/03/2018 10 EN

Underlying

Kardemir Karabuk Demir Celik Sanayi ve Ticaret A.S. D

Kardemir Karabuk Demir Celik Sanayi ve Ticaret manufactures and sells raw iron and steel products and coke and coke side products. KARABUK Co.'s products include: Steel Products - Blooms, Billets and Beam Blank; Rolling Mill Products - Hot Rolled Round Steel (Bars), Hot Rolled Round Steel (Deformed Bars), Steel Nip Beams, Steel Npu Profiles, Equal Angles, GI Profile, Rails and Billets; Coke Products - Coke Plant Products, Ammonium Sulphate, Pressed Naphthalane, Tar Paint, Carbolic Oil, Grude Benzole, Refine Washed Oil and Crude Tar and Other Products - Pig Irons, Granule Slag, Oxygen, Nitrogen, Argon.

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TRAKRDMR91G7 Istanbul Stock Exchange Turkey

Provider

BGC Partners

BGC has been one of the major market players in Turkish OTC debt, FX and swaps markets since 1998.

We started offering corporate finance and investment banking services to our clients in 2013. We offer a complete range of financial services to help our clients achieve their goals. Our main areas of activity within investment banking are as follows:

Mergers & Acquisitions
Equity Capital Markets
Debt Finance & Advisory

See profile

Analysts

Erdem Hafizoglu

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BGC Partners: TURKEY - Central Government Budget continued to improve in February

Finance Ministry released February Central Government budget figures and the data showed further improvement in budget balances, as already suggested by the Treasury cash budget figures.

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BGC PARTNERS - KARDEMIR TP REVISED UPWARDS (BUY MAINTAINED)

Kardemir - Upgrade to Buy. Domestic tailwinds, cautious on the global backdrop.

Kardemir

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BGC Partners: TURKEY - Central Government Budget continued to improve in February

BGC Partners: TURKEY - CBT Expectation Survey: No major change in inflation forecasts and a 50bps rate cut expectation from the CBT next week...

BGC Partners: TURKEY - Retail sales volume maintained a strong trend in January

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