Tupras - Keep Your Optimism
Since our March 14 report on Tupras, "Favorable Environment Means More Room to Run," the stock has gained 37% and outperformed the BIST 100 by 13%. In our March report, we argued that a turnaround in middle distillate cracks would help the company deliver healthy refining margins this year, and we became more bullish than the consensus on the company's operating outlook. In the end, Tupras managed to beat even our 1H17 EBITDA and net income forecasts, by a staggering 36% and 42%, respectively. Furthermore, product cracks have staged a strong start to 2H17, with a supply disruption at one of Europe's largest refineries at the end of the month providing an even more favorable refining environment for the company. We raise our 2017 net refining margin estimate for Tupras to $8.0/bbl from $6.5/bbl. This gives us a new target price of TRY130 per share. The stock is trading at a 2018E P/E of 8.5, a 21% discount to peers. We expect Tupras to post a 25% dollar DPS CAGR over 2016-18E. We keep our BUY recommendation on the stock.Aygaz is a liquefied petroleum gas (LPG) distribution company operating in a range of environments from cylinder production to marine transport operations. In its core business field, Co. distributes LPG as autogas, cylinder gas, and bulk gas, manufactures and sells LPG cylinders, tanks, valves and regulators, and also markets LPG-operated devices. Co. also sells and produces LPG devices and engaged in the maritime shipping of LPG. In the cylinder gas segment, Co. operates all over Turkey in points of sale under the brands of Aygaz, Mogaz and Lipetgaz. Co. has three segments: gas and petroleum products, electricity and other operations.
Sberbank CIB Investment Research is a research firm offering equity, fixed income, economics, and strategy research. It covers analysis on all aspects of Russia’s capital markets, issues and industries. The firm analyzes trends in Russia and combines local knowledge with a global perspective. It processes macroeconomic data, market and company-specific news, stock quotes and other information for providing research reports. The firm provides details and latest prices on the most traded names and most traded paper on all segments Russian market. In strategy research, it provides thematic research, tips and descriptions of the methodology used to evaluate companies.
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