TURKEY METALS & MINING - Broadly in-line results in 1Q20
Broadly in-line results in 1Q20
Koza Gold posted net income of TRY394m in 1Q20, slightly lower than our estimate of TRY436m and Research Turkey (RT) consensus of TRY437m. The deviation at the bottom line emanated from a higher-than-expected effective tax rate of 27% (vs BNPPe: 22%). EBITDA of TRY417m came in line with our estimate of TRY397m (vs RT consensus of TRY425m). In 1Q20, gold production was up by 5.4% y-y to 72k oz (vs 109k oz in 4Q19). This is 11% higher than our estimate of 65k oz, backed by higher-than-expected grade of Ovacik mine.
Based on updated macro and higher gold price forecasts, our TPs for Koza Gold and Koza Metal are up by 10% even if we incorporate 7% lower gold production forecasts for 2020. Despite solid gold prices and TRY weaknesses, we expect Koza Gold to post moderate results in 2020 as we incorporate lower gold grade projections of existing mines. In the longer term, we keep our positive stance on Koza Gold as we expect the company to focus more on increasing its gold reserve amid higher gold prices and TRY weaknesses. We view Koza Metal as a value play that provides alternative exposure to Koza Gold.
Koza Altin Isletmeleri AS. Koza Altin Isletmeleri AS is a Turkey-based company established to explore and operate gold mines in Turkey. The Company had a gold production of approximately 338,182 ounces in the 12 months of 2012. As at 31 December 2012, it had 53 operating licenses and 406 exploration licenses throughout Turkey in the Aegean and Marmara regions, the Black Sea region and Central and Eastern Anatolia. The Company owns four operating mines: an underground mine at Ovacik, a mine at Mastra & Cukuralan where it utilizes both underground and open pit mining methods, a mine in Cukuralan where it utilizes both underground and open pit mining methods and an open pit mine at Kaymaz.
Koza Anadolu Metal Madencilik Isletmeleri AS (Koza), formerly known as Koza Davetiye Magaza Isletmeleri ve Ihracat AS, is active in the commercial printing sector. During the fiscal year ended 2008, it also added copper, lead and zinc mining to its activities. Its printing products include invitation cards and stationery products, such as postcards, notebooks, calendars, letterheads, envelopes, business cards and personal organizers. Besides manufacturing and marketing of printing products, Koza is involved in the trade of printing equipment. Its subsidiaries include Koza Altin Isletmeleri A.S., Bugun Televizyon Radyo ve Prdk. A.S., Yasam Haber Ajansi Ltd. Sti., Keyland Turizm Seyh. ve Tic. A.S. and ATP Havacilik Ticaret A.S.
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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