We are downgrading our rating for Kardemir (D-type shares) to Hold from Buy. We have slightly revised down 12M TP by 3% to TL22.5/s, implying 12M total return potential of 7% and corresponding to a Hold rating. Shares returned 41%/23% in USD over the past 3M/1Y with a 36% outperformance vs. BIST-100 over the past three months. Accordingly, on our estimates, Kardemir is trading FY23E P/E of 5.7x (vs. 5Y median: 6.1x) and EV/EBITDA of 3.3x (vs. 5Y median: 3.6x), thus close to its historic averages...
Excluding Kardemir from our top picks: We are excluding Kardemir from our top picks. Shares have returned 58% in absolute TRY terms and performed in-line (1% outperformance) vs. BIST-100 since its inclusion to our model portfolio since January, 2021. While shares have reached an outperformance in excess of 40% in early March 2022; substantial increase in global recessionary concerns coupled normalization of the initial surge in regional steel prices related to the Russia/Ukraine conflict have le...
Kardemir A (KRDMA, N/R) and B (KRDMB, N/R) shares are trading at c.23% discounts vs D (KRDMD TI, Buy) shares, which is close to their highest discounts over the past three years, following their 10% underperformance vs the BIST-100 in the past three months. From a purely mechanical standpoint, KRDMA and KRDMB should theoretically trade at least at par with KRDMD, given their higher voting rights. Independent of our fundamental view on Kardemir, we believe the divergence is worth flagging from a ...
• In line with global developments and rapid increases in commodity prices, high increases are seen in product prices. This trend may continue in the short term, however there is a risk of a partial correction in the next period. • Kardemir produces 64% of its electricity needs largely by using blast furnace gas and steam gas, which impacts the margins positively due to the cost advantage. • Despite the fact that coal is imported to a large extent from Russia and Ukraine and the high increase ...
The independent financial analyst theScreener just slightly lowered the general evaluation of KARDEMIR KARABUK DEM (TR), active in the Steel industry. The title has lost a star(s) at the fundamental level and now shows 3 out of 4 stars. Its exposure to market risk remains nonetheless the same and can be still described as defensive. theScreener slightly downgrades the general evaluation to Slightly Positive for the title on account of the lost star(s). As of the analysis date February 11, 2022, ...
A director at Kardemir Karabuk Demir Celik Sanayi sold 876,755 shares at 8.035TRY and the significance rating of the trade was 63/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the la...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
We believe Turkish blast-furnace steelmakers are poised for stellar earnings growth in 2021, supported by favourable global steel sector outlook. Following the cut in steel production, owing to fall in demand as a result of Covid-19, steel supply is yet catch up with the pick-up in demand. We expect the supply-demand mismatch to continue over the near term, as we expect strong demand post Covid-19. While the current steel prices may be unsustainable with the normalisation in supply, we believe t...
Kardemir A and B type shares are both trading at c.10% discounts vs. D type shares. We believe that from a purely fundamental standpoint, the discount is unwarranted and KRDMA and KRDMB shares should theoretically trade at least at par with KRDMD shares, given their higher voting rights. Kardemir A and B type shares are both trading at c.10% discounts vs. D type shares. From a purely fundamental standpoint, the discount is unwarranted and KRDMA and KRDMB shares should theoretically trade a...
Including Kardemir to our model portfolio: We are including Kardemir to our top picks. The inclusion is in tandem with our rating upgrade report (Buy from Hold), with a 12M TP of TL9.50/s, implying 12M total return potential of 44%. The substantial TP revision reflects, 1) Our increased conviction in steel prices remaining resilient - albeit likely on a sliding trajectory in 2021E - on the back of global demand recovery; 2) Assumption of sticky scrap prices, underpinned by disruptions in the sup...
We are upgrading Kardemir (D-type shares) to Buy from Hold. We have raised our 12M TP by 64% to TL9.50/s, implying 12M return potential of 44%. The substantial TP revision reflects, 1) Our increased conviction in steel prices remaining resilient - albeit likely on a sliding trajectory in 2021E - on the back of global demand recovery; 2) Assumption of sticky scrap prices, underpinned by disruptions in the supply chain and measures by various countries incentivizing scrap and/or limiting exports, ...
We raise our 12M TP to TRY7.91 (from TRY2.71 previously) and upgrade our rating to BUY from Hold, on the back of higher steelmaking margin forecasts and updated macro assumptions. In our view, the prospects for Kardemir are brighter given the solid long steel pricing, coupled with lower coking coal prices and controlled iron ore costs from high local procurements. We expect the continued decline in its FX open position to provide some cushion in the midst of TRY weakness. Kardemir reported net ...
Operationally in-line As we expect weaker long steel demand impacted by the Covid-19 pandemic and update our macro forecasts, we maintain our HOLD rating on Kardemir, with nominal revision to our 12M TP of TRY2.71 (+8% upside potential).Even though fall in coking coal price could result in better profitability outlook for Kardemir in the short term, we expect cash generation to remain muted, owing to stagnant steel demand outlook. Kardemir reported net loss of TRY162m in 1Q20, better than our ...
Kardemir reported net loss of TRY129m in 4Q19, weaker than our loss estimate of TRY105m, but roughly in-line with Research Turkey’s loss estimate of TRY139m. Despite better than expected operating profitability and deferred tax gain of TRY24m, the divergence at the bottom-line originated from higher than expected financial expenses. Operationally, 4Q19 EBITDA of TRY79m came better than BNPPe of TRY34m and RT consensus of TRY55m. EBITDA/ton of USD24/t in 4Q19 came above BNPPe of USD10/t (vs USD12...
Similar to Erdemir, Kardemir posted weakest margins of the year in 4Q19 with 5.3% EBITDA margin (vs. 9.5% in 3Q19, 14.9% in 2Q19, and 12.4% in 1Q19) on declining steel prices (spreads) as expected. In the quarter, Kardemir sold 569k tons of steel products (3Q19: 483kt, 2Q19: 564kt, 3Q18: 504kt), above our 525kt estimate; and reported TL1,491mn revenues (down by 8.6%, y/y), better than consensus estimate of TL1,384mn (BGC: TL1,337mn).
Slowing steel production in China has caused raw material prices to normalize, indicating better margins for Turkish integrated steel companies, in our view. After a painful 2019, as input cost surged amid falling product prices, we believe that the worst is likely to be over by 4Q19 and a gradual recovery in margins should kick in, owing to the modest increase in steel prices and a normalization of iron ore prices. Even though we expect the price recovery to be gradual based on a stagnant deman...
Kardemir’s 3Q19 net income of TRY39m beat our estimate of TRY26m on lower financial expenses but it missed the Research Turkey consensus estimate of TRY45m. EBITDA of TRY124m came in-line with our estimate and RT consensus of TRY120m. EBITDA/tonne of USD45 came in-line with our estimate of USD43 (vs USD188 in 3Q18). Coupled with weaker steel making margins on weaker steel prices, a stagnant sales volume drove a discouraging performance in 3Q19. We cut our 2019 forecasts for EBITDA by 23% and fo...
Declining prices (spreads) and weak demand took their toll on Kardemir’s performance in 3Q19 as expected. In the quarter, Kardemir sold 483k tons of steel products (2Q19: 564kt, 3Q18: 504kt), slightly below our estimate of 505kt; and reported TL1,310mn revenues, down by 6.6% y/y, in line with the consensus estimate of TL1,298mn (BGC: TL1,329mn).
Given the downtrend in steel prices and iron ore, the net result is a q/q weakness in EBITDA/ton levels in 3Q19 and 4Q19. In 3Q19, one should estimate a slightly higher EBITDA per ton than US$100 (BGC: US$103), and in 4Q19 EBITDA per ton is likely to emerge at around US$90-95 (1Q19: US$146, 2Q19: US$141, 3Q18: US$225, BGC: US$127) as the impact of weaker steel prices comes with a lag.
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