Aselsan (ASELS TI) - Cash generation yet to recover: Maintain Hold
Aselsan’s net profit came in at TRY629m, beating RT consensus’s estimate of TRY589m but lagging behind our estimate of TRY719m. We note that we were off consensus on our net profit expectations as we estimated significantly higher FX gains than the market. Despite recording a TRY245m FX gain (vs our TRY268m estimate), an unexpected tax expense of TRY26m and lower-than-expected EBITDA resulted in the net profit undershooting our estimates. EBITDA came in at TRY395m, about 7% below both our/RT consensus estimates of TRY426m/TRY425m.
We maintain our HOLD recommendation on Aselsan as limited cash generation continues to sap our valuation. Despite our 12-month target price of TRY24.7, implying 22% upside from the stock’s current price, we do not find the upside potential significant enough to warrant a BUY recommendation given a cost of equity of 22%.
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.
With our 6 equity research analysts we cover 93 companies across 21 sectors, reflecting 80% of the total market capitalization of all BIST companies and 86% of the BIST100 companies. Our strategy team provides in depth top-down and bottom-up market views with insight on FX and bond markets by publishing sectoral and strategic reports both in English and Turkish.
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