Earnings Review / Enka Insaat (ENKAI TI) - Promising core operations in 3Q18: Maintain Buy
Enka Insaat reported 3Q18 net income of TRY270m, higher than our estimate of TRY178m and the Research Turkey estimate of TRY119m. This strong bottom line came from a higher-than-expected operational performance in each segment. Operationally, 3Q18 EBITDA of TRY1.2b surpassed our estimate of TRY848m and the consensus estimate of TRY909m. In 3Q18, the company booked a net TRY655m loss from financial investments due to mark-to-market (MtM) losses on fixed-income investments. We keep our BUY call on Enka Insaat as it offers solid cash flow in the midst of challenging market dynamics. Although we see weaker earnings momentum in the energy segment by 2019E, this could be potentially offset by new orders in the construction segment. Our 2018-2020E earnings and SoTP-based TP are unchanged.
Enka Insaat ve Sanayi is an engineering and construction company. Co. operates in the following geographical areas: in Turkey, Co. is engaged in a range of construction activities including construction of industrial and social buildings, motorways and construction and operation of natural gas fired electrical energy generation facilities; in Russian Federation, Georgia, Turkmenistan and Kazakhstan, Co. is engaged in construction activities and also in investment and development of real estate properties and shopping malls in Moscow, Russia; and in Europe, Co. is engaged in construction and trading activities in Romania, the Netherlands, Switzerland, Germany and Kosovo.
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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