Cimsa (CIMSA TI) - Good value after extended sell-off: Upgrading to Buy
Cimsa has the most balanced sales mix of domestic peers, in our view, which protects it from demand slowdown in the local market and energy cost hikes. For 2018E, we estimate that white cement, which is relatively profitable, will account for 25% of Cimsa’s capacity and that exports will account for 35% of its revenue.
The stock has fallen 20% in the last 12 months, underperforming the benchmark ISE National 100 index by 25%, and now trades at an 18% discount to last five year average P/E of 10.0x. We update estimates, increase our RFR by 1ppt and roll over our valuation base a year to 2018. As a result, we cut our DCF-based target price by 8% TRY16.16, which implies an attractive 40% upside. We thus upgrade our rating to BUY (from Hold).
Cimsa Cimento Sanayi ve Ticaret is engaged in the cement industry. Co. produces and sells cement and ready-mixed concrete. As of Dec. 31, 2004, Co. maintains 17 ready-mixed concrete plants in 8 provinces.
TEB Investment equity research analysts and strategist team consists of 8 analysts with an average finance sector experience of 15 years and special focus on international investors.
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