2 Mart 2012 Cuma

Enka Insaat ve Sanayi AS (ENKAI.IS)

Construction backlog is improving; reiterate Buy

Source of opportunity;

We update our estimates for recent construction project awards. We; estimate the construction project backlog at c.US$2 bn (c.2x 2011E; construction segment sales). We now expect 2012 construction revenue to; rise c.40% to US$1.34 bn (15% higher than our previous estimate). Our; consolidated revenue and EBITDA estimates rise an average c.5% in; 2012-13. We are now 6% above Bloomberg/Reuters consensus on 2012; consolidated EBITDA. We believe the construction backlog improvement; will trigger a stock re-rating towards historical multiples. Our new 12-; month price target (+8%) implies c.40% upside; reiterate Buy.;


Key short-term catalysts include new construction projects in Iraq and; Russia. The winning of the Abu Dhabi airport project by the Bechtel-Enka-; Al-Jaber consortium (we estimate Enka’s potential share at c.US$1.5 bn); would provide upside to our 2012-15 estimates if secured. We highlight; that the odds to win it are increasing (bids were submitted, four; consortiums including Enka’s are now left in the tender). The winner; should be announced by mid-2012.;


Our SOTP-based 12-month price target of YTL7.0 (up from YTL6.5) implies; c.40% upside. Our target price is based on a 12-month forward US$ target; value per share of US$3.93 and a YTL/US$ rate of 1.77. Enka is trading at; 12.2x 12-month forward P/E (versus 15x five-year average) and 6.0x 12-; month forward EV/EBITDA (versus 8.7x five-year average).

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