TURKEY METALS & MINING - Slightly better results in 2Q20
Koza Gold’s 2Q20 net income of TRY470mn slightly beat our estimate of TRY443m and Research Turkey consensus of TRY422m due to better operating profitability - EBITDA of TRY477m beat our estimate of TRY416m (vs. RT consensus of TRY449m), driven by lower than expected cash costs. Despite lower gold production q-q, cash cost/oz was down by 7% q-q to USD587/oz (vs USD420/oz in 2Q19) driven by lower than expected R&D expenses and 11% TRY depreciation against the USD.
Based on updated forecasts for macro-indicators and higher gold price assumptions, our TPs for Koza Gold and Koza Metal are up by 25% each. Based on strong gold prices and TRY weakness, we expect Koza Gold to recoup production losses related it expects based on projections of lower grade gold for its existing mines. In the long term, we keep our positive stance on Koza Gold as we expect the company to focus more on increasing its gold reserves amid higher gold prices and TRY weaknesses. We view Koza Metal as a value play that provides an alternative exposure to Koza Gold.
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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