Earnings Review / Tupras (TUPRS TI) - Boosted by inventory gains: Maintain Hold
Tupras reported net income of TRY542m in 3Q18, lower than our estimate of TRY777m and Research Turkey consensus of TRY639m. The deviation at the bottom line stemmed from higher-than-expected financial expenses. 3Q18 EBITDA of TRY3.7b came broadly in line with our estimate of TRY3.5b but 14% higher than market consensus of TRY3.3b. Despite higher sales volume on the absence of maintenance shutdowns and TRY2b inventory gains, FX losses of TRY2.4b wiped out bottom line growth in 3Q18. CCS EBITDA of TRY1.7b (adjusted for FX items and inventory gain) came much lower than our estimate of TRY2.6b despite production recovery, due to slightly lower diesel yield and weaker average sales prices.
We raised our 12M TP by 40% to TRY153.93 as we have started to reflect the impact of IMO 2020 sulphur cap regulation on our forecasts for Tupras. Even though we believe Tupras is one of the top beneficiaries of the IMO 2020 sulphur cap regulation backed by high quality products basket and high complexity, we think the associated strong prospects are priced in.
Turkiye Petrol Rafinerileri is an energy and refining company based in Turkey. Co. is engaged in providing and refining crude oil, the importing and exporting of oil products, and establishing and operating refineries in Turkey and foreign countries. Also, Co. is establishing and operating factories and facilities in the petrochemical industry. Co. is engaged in purchasing, selling, importing, exporting, storing, marketing and distributing (wholesale, retail, foreign and domestic) all kinds of petroleum products, LPG and natural gas. Co. runs its business through the refineries in Izmit, Izmir, Kirikkale and Batman.
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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