Enka Insaat (ENKAI TI) - Boosted by MtM gains: Maintain Buy
Enka Insaat reported 4Q18 net income of TRY824m, higher than our estimate of TRY519m but in-line with the RT estimate of TRY770m. Strong bottom-line came from higher-than-expected mark-to-market (MtM) gains from fixed-income investments and lower effective tax rate of 8% in 4Q18. 4Q18 EBITDA of TRY791m undershot our estimate and RT consensus of TRY1b on weaker profitability of contracting and real estate segments. In 4Q18, it booked net TRY229m MtM gains from fixed-income investments.
We lower our 2019-20E by 2-3% and our SoTP-based TP by 4% to factor 4Q results. Despite any catalysts, we maintain BUY on Enka Insaat as it offers solid cash flow amid a challenging macro environment. While we see weaker earnings momentum in the energy segment in 2019, almost 66% of the current market value (CMV) is in cash and the CMV does not factor any value for the NAV of the contracting and energy, in our view
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.
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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