EUR 105.92 For Business Accounts Only

BGC Partners: PINAR SUT 4Q18 - Better

Pinar Sut reported a net profit of TL39.7mn in 4Q18, better (BGC: TL20mn)… FX gains on TL’s appreciation (in contrast to 3Q18), and tax “income” of TL8.3mn in 4Q18 on ongoing Sanliurfa investments are the boosting factors. Pinar Sut had also a strong operational profitability in the quarter with TL32mn EBITDA at 8.6% margin (3Q18: TL19mn at 4.8% margin) vs. our TL25mn estimate at 6.4% margin estimate, despite the harsh competition in the sector. The market is difficult for producers to reflect raw material prices hikes (such as raw milk, packaging, energy etc.) to its end product prices due to competition (mainly from private labels and clients’ declining purchasing power, but Pinar’s performance is positive in our view, if sustained. In the quarter, the company’s working capital requirements decreased by TL41mn to TL131mn, which has improved the net debt to TL130mn at 2018-end from TL177mn at 9M18-end. Overall, we think that the market reaction on 4Q18 bottom line may be positive. The stock trades at 6.5x P/E and 4.1x EV/EBITDA on 12M trailing number as of 2018-end. (Matriks, BGC Partners)