ENKAI TI 4Q22 Review (Oyak Yatırım)

Enka Insaat (ENKAI) announced net profit of TL5.06bn, beating the consensus estimate of TL3.97bn, thanks to the better-than-expected income from investing activities, especially from the gain on the sale and purchase of marketable securities and increase in value of financial investments. EBITDA came in at TL3.66bn (+98% y/y, -20% q/q), in line with the market expectation, while EBITDA margin came in at %20.9% (3Q22: 22.6%, 4Q21: 19.2%). Revenue reached TL17.6bn indicating an increase of 82% y/y and a decline of 13% q/q, 7% lower than the consensus estimates of 18.8bn.

Top-line grew y/y but decreased q/q… Revenues were up by 82% y/y but down by 13% q/q. Annual net revenues reached TL61.8bn, up by 140% y/y, while the contracting segment posted the highest share of the revenues segment with 51.8% with a current backlog of USD4.12bn (9M22: USD3.61bn), followed by the energy segment's 34.8%, the real estate rentals and trading segment 15.8%, and the remaning 2.4% is elimination.

Better-than-expected income from investments… ENKAI posted TL2.96bn net income from investments, whereas in 2Q22 and 3Q22 the company had netted a loss of TL8.0bn and TL1.8bn, respectively. The Company's losses occurred via the outbreak of Russia and Ukraine war and in our view, as the war eases, regains could continue.

Net cash position improved further… The company's net cash position increased by 6% q/q to TL82.4bn (including financial investments) in 4Q22, which indicates a net debt/EBITDA multiple of -5.9x (9M22: -6.4x).

We maintain our Marketperform rating with a new target price of TL28.00/share… We revised our 2023E net income projections for ENKAI as TL12.0bn (prev. TL11.2bn), EBITDA as TL12.7bn (prev TL12.4), revenue as TL65.3bn (prev. TL62bn). Also considering the improvement in net cash position, we raise our target price slightly to TL28.00/share from TL26.60/share. We keep our Marketperform rating for the shares.


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