Arcelik: M&A and guidance upgrade boost our PT (upgraded to HOLD)
We have upgraded our rating for Arçelik to HOLD (from Sell), with a new price target (PT) of TRY 35/share. Arçelik was a surprising winner of the COVID-19 pandemic, as its production CUR reached c.100% and its EBITDA grew by 49% in 2H20 (in EUR), with a FCF yield of c.20%. The company turned the opportunity of low gearing (0.95x ND/EBITDA) and EUR 1.3bn of cash into M&A. The consolidation of Hitachi and Whirlpool’s Turkish unit, and stronger demand have led to a 71-103% upward revision in our 2021-23E sales forecasts, while we see the dilutive impact of M&A on its EBITDA margin resulting in our more conservative margin assumptions (vs. its guidance). We still see Arçelik as attractively valued, at our 2021E EV/EBITDA forecast of 4.8x, a 38% discount vs. its global peers, but also a 19% discount vs. its Turkish consumer/ industrial peers.Arcelik is engaged in the commercial and industrial activities in respect of the production, sales and marketing, customer services after sales, exportation and importation of consumer durable goods and consumer electronics. Co. has two segments: white goods reportable segment, which comprises washing machines, dryers, dish washers, refrigerators, ovens, cookers and the services provided for these products; and the consumer goods reportable segment, which comprises televisions primarily with flat screens, computers, cash registers, other electronic devices and the services provided to consumers for these products.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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