CIMSA: 1Q23 Review (Oyak Yatırım)

Impacted by noncore items
Cimsa announced a net profit of TL252mn (+102% y/y, -45% q/q) in 1Q23, below both market consensus TL323mn and our estimate TL381mn. EBITDA came in at TL314mn (+129% y/y, +30% q/q), slightly above both market consensus (TL292mn) and above our estimate (TL260mn). EBITDA of TL314mn indicates 13.3% EBITDA margin (4Q22: 9.4%, 1Q22: 10.1%). Sales (TL2.363mn) were in line with our estimates (TL2,250mn) and the market consensus (TL2,435mn). Discount of electricity prices and drop in petcoke prices reduced cost of sales which helped EBITDA to surpass expectations.

The share of domestic sales decreased slightly
Cimsa generated TL2,363mn revenue (+74% y/y, -8% q/q) in which domestic sales (+110% y/y) corresponds to 53% of the total sales (4Q22: 59%. Export sales on the other hand, were up 35% y/y.

Electricity discount and drop in petcoke prices supported EBITDA margin to surpass previous quarter and expectations
Direct raw material and material expenses decreased by 53% q/q although there is an increase of 181% y/y as a result of the low base of 1Q22. The reason of the q/q decrease in raw material and material expenses is electricity discount q/q and drop in petkok prices. General Administrative expenses were TL136mn (+106% y/y, -7% q/q) which is 92% of OPEX. There is a significant decrease in net income from investing activities and profit from other subsidiaries compared to 4Q22. Thus, net margin was announced 10.7% in 1Q23, below both market consensus and our estimate (MC: 13.3%, OYAKe: 16.9%). EBITDA margin was announced 13.3% (4Q22: 9.4%, 1Q22: 10.1%) which is also higher than both market consensus and our estimate (MC: 11.6%, OYAKe: 12.0%).

Net debt position grew
Çimsa has increased their net debt position by 483% q/q to TL1,097mn. Net working capital increased to 1,759 (+51% q/q). Company significantly reduced its accounts payables to 1,192 (-32% q/q) which is the main reason of this increase in net working capital. Net debt/EBITDA multiple
became 0.8x (2022: 0.2x) due to increase in EBITDA.

We maintain our Marketperform rating and cut our TP to TL95/share
We revised our forcasts for net income, EBITDA and net sales forecasts to TL1,052mn (prev. TL1,754), TL1,202mn (prev. TL1,604) and TL10,577 (prev TL14,103) based on our new petcoke and electricity price assumptions. Thus, we reduce our target price to TL95.00/share from TL109.00/share. We maintain our Marketperform rating for the stock.


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