TURKEY METALS & MINING - Robust performance in 1Q19
Koza Gold reported net income of TRY320m in 1Q19, in-line with our estimate of TRY324m and Research Turkey consensus of TRY327m. Operationally, 1Q19 EBITDA of TRY253m was 11% below our estimate of TRY284m (vs. market consensus of TRY293m) due to weaker gold production because of a lack of production from Mastra mine. In 1Q19, gold production surged 47% y-y to 68k oz gold which was 71.5k oz gold in 4Q18. This is 8% lower than our estimate of 74k oz gold, due to absence of production at the Mastra mine.
Despite a lower gold production forecast, we raise our TP for Koza Gold by 2% and Koza Metal by 2% on weaker forecasts for TRY against USD. We keep our positive stance on Koza Gold as it offers a promising turnaround story, backed by increasing gold production amid rising interest rates and TRY weakness. We view Koza Metal as a value play that provides alternative exposure to Koza Gold. Due to a lack of catalysts other than a valuation discount, we prefer Koza Gold to Koza Metal.
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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