AKSEN: 1Q23 Review (Oyak Yatırım)

Operationally strong
Aksa Energy (AKSEN) posted a net profit of TL1.05bn, above market consensus (TL853mn) and our estimate (TL832mn). Better-than-expected operational profitability led to the beat. Accordingly, EBITDA came in at TL1.76bn, significantly above market consensus estimate of TL1.31bn (OYAKe: 1.31bn). Sales came in above market consensus but in-line with our estimate, realized at TL8.29bn. Net debt/EBITDA multiple reduced slightly to 1.0x (1Q22: 1.7x, 4Q22: 1.2x) thanks to slight decrease in net debt (1Q23: TL6.49bn, 2022: TL7.37bn).

Sales grew 41% y/y
Aksen’s energy trading activities, which generate very low profitability, but high sales diminished largely in 1Q23. As a result, quarterly top-line declined 30%. A major quarterly decline is prevented by the high electricity trading volume, even though overhaul in Antalya plant and partial production shutdowns in Bolu plant during 4Q22. Thanks to favorable FX rates, and new investments, the Company managed to attain 41% y/y in revenues despite the sharp y/y decline in electricity prices.

Margins were lower y/y due to last year’s high base but recovered q/q with a significant contribution from Uzbekistan operations…
AKSEN’s gross margin came in at 19.6% (1Q22: 24.2%, 4Q22: 8.3%) Opex-to-sales ratio increased to 1.5% in 1Q23 (1Q22: 1.0%, 4Q22: 0.5%). EBITDA margin came in at 21.3% (1Q22: 27.8%, 4Q22: 9.2%). Despite the high base of last year, EBITDA grew %8 y/y thanks to favorable FX rates, additional income from Congo plant and better operational results from Uzbekistan with a TL388mn EBITDA contribution, which was only TL76mn in 1Q22. Also, EBITDA grew 60% q/q, attributable to better foreign operations and elimination of overhauls and production shutdown in Türkiye.

2023 guidance was given, lower than our estimates
The management expects TL27.71bn net sales (composition: 76% domestic, 24% international), TL7,79bn EBITDA (composition: 41% domestic, 59% international), and TL3.10bn CAPEX (composition: 65% Asia, %3 Africa, and 32% domestic).

TP and estimates changed; MP maintained…
We revised our 2023 projections for AKSEN, according to the Company’s guidance. Revenues are revised to TL29.33bn (previous: TL79.39bn), EBITDA to TL7.84bn (previous: TL9.17bn) and net income to TL4.31bn (previous: TL6.29bn). Thus, we lowered our target price to TL34.17/share (from TL41.00/share). We keep our Marketperform rating for the stock which trades at 7.9x P/E and 5.4x EV/EBITDA multiples based on our 2023 expectations. Our new TP indicates an 23% upside potential from the current market levels.


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