Company Report / Akcansa (AKCNS TI) - Outlook is worsening: Downgrading to Hold
Given the current economic volatility and rising interest rates, there has been a noticeable slowdown in activity in Turkey's construction sector since August. We cut our local sales volume estimates and expect the company’s domestic cement sales to decline 12% y-y in 2018.
Management has said it will shift sales towards export markets. Accordingly, we increase our revenue estimates despite the reductions in our domestic volume estimates, as recent depreciation of TRY against hard currencies should equate to strong export revenues.
Electricity prices have increased 28% since the beginning of the year, while petcoke prices have risen 10-15% in USD terms but their effect in TRY terms is much higher given the significant depreciation of TRY against USD.
After revising our estimates we cut our TP to TRY9.30, which offers limited upside potential of 9.7%. Therefore, we downgrade our rating to 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.
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