CIMSA TI: 4Q22 Review (Oyak Yatırım)

Cimsa posted TL457mn of net profit in 4Q22, higher than the consensus estimate of TL287mn and our estimate of TL159mn thanks to higher than expected contribution from its participations and tax income. EBITDA came in at TL241mn (+78% y/y, -38% q/q), lower than the consensus estimate of TL270mn, due to the q/q surge in direct raw and production materials costs. EBITDA margin retreated to 9.4% (3Q22: 15.9%, 4Q21: 11.1%), lower than our estimate of 10.5% and consensus estimate of 11.3%. Top-line came in at TL2.56bn, indicating an increase of 111% y/y and 5% q/q, slightly higher than the consensus estimate of TL2.39bn.

The share of domestic sales increased slightly
In 4Q22, gross domestic sales were up by 2% q/q and constituted 56% of total sales (2022 share: 50.5%), while gross exports contracted by 10% q/q, possible related with better pricing in the domestic market. Thus, total revenues were up by 111% y/y and 5% q/q in 4Q22. For 2022, CIMSA netted TL8.58bn revenues indicating an increase of 129% y/y.

Margins deteriorated due to surge in raw material costs
In 4Q22, electricity costs were 5% lower compared to previous quarter but raw material costs more than tripled q/q to TL919mn. Hence, gross margin dropped to 13.8% from 18.2% in 3Q22. Opex-to-sales ratio increased to 6.0% in 4Q22, (3Q22: 4.4%, 4Q21: 5.2%) on the back of increasing personnel costs. EBITDA margin was announced as 9.4% (3Q22: 15.9%, 4Q21: 11.1%) as a result of deteriorated gross margin and increased OPEX figures.

Net cash turned to net debt position
The company had a net cash position in 3Q22 thanks to the sale of its two integrated cement plants, one grinding facility and seven ready-made concrete plants to "Ferpa Insaat and Petrol Urunleri" for EUR110mn+VAT. In 4Q22 the company posted a net debt of TL188mn on the back of increasing net working capital requirement, which represents a net debt / EBITDA multiple of 0.2x (-0.5x in 3Q22).

Marketperform rating with TL109/share target price
We have raised our 2023 sales and EBITDA forecasts to TL14.10bn and TL1.60bn from TL12.90bn and TL1.47bn, respectively, after some upward adjustment in our sales forecasts. Thus, we raised our target price from TL94.4/share to TL109.0/share. We maintain our Marketperform rating for the shares.


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