Kardemir (KRDMD TI) -Solid earnings momentum ahead: Upgrading to BUY
We raise our 12M TP to TRY7.91 (from TRY2.71 previously) and upgrade our rating to BUY from Hold, on the back of higher steelmaking margin forecasts and updated macro assumptions. In our view, the prospects for Kardemir are brighter given the solid long steel pricing, coupled with lower coking coal prices and controlled iron ore costs from high local procurements. We expect the continued decline in its FX open position to provide some cushion in the midst of TRY weakness.
Kardemir reported net loss of TRY129m in 3Q20, better than our loss estimate of TRY150m and Research Turkey consensus loss estimate of TRY167m. 3Q20 EBITDA stood at TRY317m, 10% higher than BNPPe of TRY288m and RT consensus of TRY289m. 3Q20 EBITDA/tonne of USD74/tonne is slightly higher than our estimate of USD67/tonne (vs USD43/tonne in 2Q20). Backed by higher long steel prices and lower raw material costs, Kardemir posted a solid operational recovery.
Kardemir Karabuk Demir Celik Sanayi ve Ticaret manufactures and sells raw iron and steel products and coke and coke side products. KARABUK Co.'s products include: Steel Products - Blooms, Billets and Beam Blank; Rolling Mill Products - Hot Rolled Round Steel (Bars), Hot Rolled Round Steel (Deformed Bars), Steel Nip Beams, Steel Npu Profiles, Equal Angles, GI Profile, Rails and Billets; Coke Products - Coke Plant Products, Ammonium Sulphate, Pressed Naphthalane, Tar Paint, Carbolic Oil, Grude Benzole, Refine Washed Oil and Crude Tar and Other Products - Pig Irons, Granule Slag, Oxygen, Nitrogen, Argon.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.