3Q12 non-operating numbers
beat estimates
In 3Q12, Enka reported a net profit of USD173m (+79% y-y, our estimate: USD149m, CNBC-e consensus: USD143m). EBITDA at USD209 (+6% y-y, +25% q-q) was in line with our estimate, but was above consensus (USD196m). The positive surprise was at the non-operating level, driven by higher financing income (USD47m) than our estimate (USD25m).
Divergent performances between segments
Real-estate performance was exceptionally strong on the back of strong margins and revenue (EBITDA USD82m, +25% y-y, our estimate: USD69m). Contracting revenue at USD427m (+48% y-y) was above our USD382m estimate, but EBITDA at USD59m (-15% y-y, +32% q-q) fell short of our estimate (USD65m).
BUY maintained, target price raised to TRY5.45 (previous: TRY5.41)
We fine-tune our 12-month sum-of-the-parts TP to TRY5.45 (from TRY5.41) reflecting the better performance in real estate, but the weaker performance in contracting than we expected. Key downside risks are a sharp decline in oil prices, lower normalised contracting EBITDA margin than our estimate of 14%, and newsflow on Iraq impacting sentiment.
In 3Q12, Enka reported a net profit of USD173m (+79% y-y, our estimate: USD149m, CNBC-e consensus: USD143m). EBITDA at USD209 (+6% y-y, +25% q-q) was in line with our estimate, but was above consensus (USD196m). The positive surprise was at the non-operating level, driven by higher financing income (USD47m) than our estimate (USD25m).
Divergent performances between segments
Real-estate performance was exceptionally strong on the back of strong margins and revenue (EBITDA USD82m, +25% y-y, our estimate: USD69m). Contracting revenue at USD427m (+48% y-y) was above our USD382m estimate, but EBITDA at USD59m (-15% y-y, +32% q-q) fell short of our estimate (USD65m).
BUY maintained, target price raised to TRY5.45 (previous: TRY5.41)
We fine-tune our 12-month sum-of-the-parts TP to TRY5.45 (from TRY5.41) reflecting the better performance in real estate, but the weaker performance in contracting than we expected. Key downside risks are a sharp decline in oil prices, lower normalised contracting EBITDA margin than our estimate of 14%, and newsflow on Iraq impacting sentiment.
Real estate can further surprise on the upside
For contracting, Enka expects a sharp increase in margins in 4Q12, yet notes that 2012 EBITDA margin can fall slightly short of its 18% guidance. We lower our already more conservative EBITDA margin estimate from 16% to 15.4%, while slightly raising our sales growth forecast (change in 2012E EBITDA: -2.6%). We retain our normalized EBITDA margin forecast at 14%. For real estate, we raise our 2012 EBITDA estimate by 4.7% to USD292m and believe there is upside to our estimates if the 3Q12 margin of 73% turns out to be sustainable. Energy’s EBITDA miss of USD10m is no cause for concern, as we expect Enka to deliver our full-year estimate of USD261m due to its take-or-pay/cost-plus agreements.
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