Tupras (TUPRS TI) - Last call prior to a re-rating: Upgrading to Buy
We raise our 12M TP by 48% to TRY201.7/sh, reflecting 2020 multiples into our valuation as the IMO 2020 sulphur cap regulation approaches. With the completion of comprehensive RUP maintenance in May 2019, we expect significant q-q improvement in its earnings momentum by 2H19 backed by efficiency gains and cheaper crude slates.
We believe Tupras is a top beneficiary of the IMO 2020 sulphur cap regulation backed by a high-quality products basket and the high complexity of its refining assets. Backed by strong earnings momentum prospects, our 2019 and 2020 dividend yield estimates stood at 6.5% and 19.7%, respectively, which are significantly higher than its peer median of 4.1% and 4.6%. The stock trades at 41% discount on 2020E EV/EBITDA multiple compared to its global peers.
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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