Akcansa (AKCNS TI) - Weak local demand to persist: Maintain Hold
Cement demand in Turkey fell by 40% y-y in 1H19 adversely impacted by high interest rates and the contracting economy. Akcansa management expects the growth decline to moderate somewhat in 2H19 (-18% y-y) on a low base. Thus, they to do not see big recovery signs for local demand in the next two quarters. However, management expects local demand to remain flat in 2020 y-y.
Akcansa stock fell 16.8% and underperformed the ISE National 100 by 10% in the last month in anticipation of weak local demand extending into ensuing quarters. The stock now trades at 10.1x 2019E P/E - a mere 10% discount to the last 4-year average of its 1-year forward P/E of 11.2x. After cuts to our 2019-21E earnings, our DCF-based TP is 33% lower, but implies 10% upside potential from current levels. We maintain HOLD.
Co. is engaged in the manufacture and sale of clinker, cement and ready mixed concrete, establishment of facilities for the same or their purchase in part or in full.
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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