EUR 102.90 For Business Accounts Only

TUPRAS <TUPRS TI> 4Q18 Earnings Review and Company Update

TUPRS – ROBUST RESULTS .. Tupras reported a net profit of TL1,766mn in 4Q18, better than market consensus of TL1,535mn and BGC estimate of TL1,501mn. EBITDA was at TL1,743mn in 4Q18 also beating market consensus of TL1,481mn and BGC estimate of TL1,103mn. Deviations from our expectations were i) an inventory loss of US$38mn vs. our expectation of US$100mn, ii) higher middle distillate yields and iii) a net tax income of TL139mn while we were expecting a net tax expense of TL211mn. On the other hand, net financial expenses were higher than our expectations in 4Q18. EBITDA increased by 47% YoY thanks to TL depreciation against US$ by 45%, higher white product yield and better crack margin. Inventory loss and crude differentials prevented a further growth in EBITDA. For the full year, EBITDA grew by 51% parallel to positive FX impact and inventory gain. We expect the earnings announcement to have a positive impact on the stock. We expect a gross DPS of TL12.7 for Tupras, pointing a gross dividend yield of 9.0%. BUY Maintained. We updated our valuation with 4Q18 financials and the management guidance for 2019, yet our target price remained almost flat at TL160.7/share (TL173.5 including dividend), pointing to a 12-month total return of 22%.