Koc Holding (KCHOL TI) - NI backed by energy & automotive: Upgrading to Buy
Koc Holding posted a 2Q net income of TRY1,425m (+83% q-q, flat y-y), better than our estimate (TRY1,214m) and RT consensus (TRY1,175m). Good results at the appliance and automotive segments supported earnings at Koc Holdings in 2Q. At the top-line, the combined EBITDA fell 24% y-y to TRY5.4b, dragged largely by the energy segment. The energy segment’s EBITDA fell 40% y-y to TRY1.7b, recording 4.3% margin (-3.7ppt y-y) due to weaker refining margin dynamics and less inventory gain in 2Q. The appliance segment’s EBITDA hiked 5% y-y, delivering an EBITDA margin of 6.9% (-1.5ppt y-y). Good operational performance is supported by higher sales volume despite contracted domestic demand, price hikes at international markets and TRY depreciation. Combined capex rose 7% y-y to TRY2.7b in 2Q, underpinned by elevated capex at the energy segment.
We raise our target price for Koc Holding to TRY21.29 (from TRY17.75), driven mainly by our target price change for Tupras. Our new TP represents 17% upside potential, prompting us to upgrade the stock to BUY from Hold.
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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