19 Kasım 2012 Pazartesi

KARDEMIR - On-track performance: BUY

2012 earnings raised to reflect ytd performance
We raise our 2012 EPS for Kardemir 42% to TRY0.25 to account for 9M12 earnings. We adjust our forecasts for the later years to reflect our new steel and raw material price assumptions as discussed in our Erdemir report Notable uncertainty remains (19 October 2012).

3Q12 results broadly in line with our estimates
Kardemir’s 3Q12 bottom line came in at TRY47m (down 43% y-y, BNPP/CNBCe consensus: TRY49m/TRY53m) on EBITDA of TRY84m (down 19%, BNPPe/CNBCe: TRY83m/TRY89m) and revenue of TRY429m (down 3% y-y, BNPPe/CNBCe: TRY466m/TRY426m).

D-class shares valued on relative PE and EV/EBITDA multiples
Our D-class share valuation for Kardemir is based on global peers’ 2013 and 2014 P/E and EV/EBITDA multiples on Bloomberg consensus estimate to which we assign discounts of 20% and 40%, while taking into account board privileges assigned to other share classes. Key risks to our view are execution risks to capacity expansion plans and steel prices.

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