Tupras: So… time to fly (upgraded to BUY)
We have upgraded Tupras to BUY (from Hold), with an updated 12M price target (PT) of TRY 191.9 (from TRY 93.8), offering 21.5% upside. Tupras is one of the biggest winners of the refining margin recovery, in our view, as an almost pure-play refiner, with the highest jet fuel yield among its peers, and doing business in a market with strong growth. It has cost advantages, a weak currency, does business outside of CO2 trading and Turkey has lower energy prices than other European markets. As earnings have recovered, leverage has fallen, and should reach 0.74x by the end of 2021E. FX losses remain a risk, but the impact is less when margins are higher. We do not expect dividends from the 2021E earnings but, once Tupras has replaced its legal reserves, it should return to its generous old ways, in our view. We see Tupras’ multiples at above the peer group, for 2021E, but falling closer to its peers by 2023E, on our estimates.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.
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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