Koc Holding (KCHOL TI) - Backed by finance and automotive: Maintain Buy
1Q18 net income of TRY1,141m (+6% q-q, +1% y-y) beat both the RT consensus estimate (TRY988m) and our estimate (TRY872m). The deviation with our estimate was largely due to higher-than-expected earnings of the finance segment. The finance and automotive segments were the main contributors of 1Q18 earnings. Combined EBITDA grew 3% y-y to TRY5b, driven largely by finance, automotive and appliance segments. Weak EBITDA growth at the energy segment was partly offset by EBITDA expansion in others.
Koc Holding’s stand-alone net cash position including Yapi Kredi’s planned capital increase fell to USD455m (end-2017: USD574m). Reflecting this, we cut our SOTP-based 12M TP by 3% to TRY19.03/sh but maintain our BUY rating. We raise our 2018/19 earnings by 2.6%/3.0% after the 1Q18 results. Koc Holding’s valuation discount to its 2018E NAV stands at 20%, higher than its historical five-year average (5%).
Koc Holdings is an investment holding company. Through its subsidiaries, Co. is engaged in the business of natural gas, marketing, petroleum shipping, liquefied petroleum gas, power generation, production and trading of petroleum products and mining in the energy sector, production, trading, insurance and car rental in the automotive sector, production and sales, procurement, research and developement in the consumer durables sector, consumer finance, banking, custody, financial consulting, leasing, brokerage, real estate and portfolio management and brokerage banking in the finance sector, and tourism, trading, technology, ship construction and foreign trade in the other sectors.
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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