Tupras (TUPRS TI) - Strong results in 4Q18: Maintain Hold
Tupras reported NI of TRY1.77b in 4Q18, in line with BNPPe's TRY1.71b but 15% higher than RT consensus's TRY1.5b. In 4Q18, the NI was boosted by a deferred tax gain of TRY183m and hedging gains. 4Q18 EBITDA of TRY1.7b overshot BNPPe's TRY1.2b on lower-than-expected inventory losses (vs RT consensus's TRY1.5b). CCS EBITDA of TRY2.1b (adjusted for FX items and inventory gain) came broadly in line with BNPPe's TRY2.3b. Despite a 40% plunge in crude oil prices, it booked TRY212m inventory losses (vs. our estimate of TRY687m), thanks to a successful hedging policy.
Despite a promising outlook considering the approaching IMO 2020 sulphur cap regulation, we expect cash generation to be stagnant in 1H19 due to the detailed maintenance of RUP units for 12-13 weeks. Since we believe the stock almost reflects strong IMO 2020 sulphur cap regulation prospects, we look for a better entry point.
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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