Tekfen Holding: Cash rich value play (upgraded to BUY)
We have updated our earnings estimates and valuation assumptions for Tekfen Holding (TH) to reflect the company’s 9M19 execution and improved operating outlook, and our revised FX and lower Turkish RFR assumptions. Our revised sum-of-the-parts (SotP) valuation, including a 20% conglomerate discount, now implies a 3% lower 12-month price target (PT) of TRY 28.72/share, but still offers an attractive 44% upside potential. Following TH’s 30% relative underperformance vs. the BIST100 over the past year, and with a USD 620m net cash position (c.49% of its current market cap), the shares trade at an undemanding 3.4x EV/EBITDA and 7.2x P/E on our 2020E estimates, placing the stock at c.45% discount vs. its engineering and fertiliser sector peers. We have upgraded our rating on Tekfen Holding to BUY (from Hold).Tekfen Holding conducts its operations in four main business segments: Contracting, Agriculture, Real Estate and Other operations. Contracting group focuses on construction of petroleum and gas facilities, land and sea terminals, offshore platforms and tank farms. Agricultural group has operations in chemical fertilizer, ground and vegetable grain, production, distribution and trade of seedling and sapling. Real estate group operates in designing, constructing, renting, and sale of real estates such as residents, offices, shopping centers and hotels. Operations of other segment comprise of light-pulp trading, cotton yarn production and trading, insurance services and holding 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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