Aygaz: Last man standing (downgraded to HOLD)
In 1H18, a series of events (lira weakness, underperformance at Tupras, high inflation, early elections, disappointing 1Q results) led to the stock price falling to levels seen before Aygaz started receiving dividends from Enerji Yatirimlari, the owner of Tupras. However, recently, Aygaz, partly supported by gains at Tupras, has shown its defensive nature, outperforming the BIST100 by 8%. Despite the core business trading at 2.5x EV/EBITDA (Bloomberg consensus) vs. its three-year average of 4.1x, double-digit dividend yields and our positive view on the company’s overall portfolio, we have downgraded Aygaz from Buy to HOLD, due to our recent downgrade of Tupras (HOLD, PT TRY 146.9), which has rallied recently, and our more cautious view on Aygaz’s core business in the coming quarters. We have revised our WACC model assumptions, reducing our EBITDA expectations slightly for the coming years, due to the ongoing pressure on mark-ups and our more conservative sales volumes assumptions, arriving at a new price target (PT) of TRY 14.0, offering 11% upside.Aygaz is a liquefied petroleum gas (LPG) distribution company operating in a range of environments from cylinder production to marine transport operations. In its core business field, Co. distributes LPG as autogas, cylinder gas, and bulk gas, manufactures and sells LPG cylinders, tanks, valves and regulators, and also markets LPG-operated devices. Co. also sells and produces LPG devices and engaged in the maritime shipping of LPG. In the cylinder gas segment, Co. operates all over Turkey in points of sale under the brands of Aygaz, Mogaz and Lipetgaz. Co. has three segments: gas and petroleum products, electricity and other operations.
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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