· Sector outlook: Main growth drivers: population growth, urbanization (Turkey’s avg 74%
vs. EU 85%), renewal need (7mn out of 19mn houses). Accordingly, Turkey is in
need of 15-16mn new houses in the next 10-15 years.
· Upcoming projects: Ayazaga project is expected to be launched in September. Min revenue
share stands at TL1.15mn for EKGYO. Moreover, Bahcetepe (TL165mn) and Dikilitas
(TL360mn) projects are also expected to be launched by YE12.
· Margins:
EBITDA margin for the revenue sharing projects hover at around 40-50% while
public procurement projects are at 20%.
· SPO: There
are no SPO plans in the coming period. The company does not have any cash need
in the medium term. But TOKI considers decreasing its share (75%) in the longer
term.
· VAT regulation: New regulation increases the VAT for the middle and upper segment
houses below 150 sqm to 8-18% from 1%. The government wants to benefit from the
increasing amount of small houses with high appraisal values in premium
locations. Konut-Der (Housing Association) requested an extension from the
Cabinet regarding the execution of the law to not to curb the demand sharply.
Accordingly, the law is expected to be operational not sooner than 2013.
· NAV: TL6.8bn
as of 1H12. The stock trades at a 1% discount
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