ODAS TI 4Q22 Review (Oyak Yatırım)

Results were below estimates
Odas Elektrik posted TL166mn net profit (+3% y/y, -87% q/q) for 4Q22, worse than the consensus forecast of TL1,232mn (2 estimates) due to the higher than expected cost of sales, under which expenses related with TEIAS Turkish Electricity Transmission Company) and EPIAS (Energy Exchange Istanbul) rose by TL763mn q/q to TL765mn. Thus, EBITDA of TL633mn fell short of the consensus forecast of TL1,425mn. While net debt dropped by 6% q/q to TL902mn thanks to the positive EBITDA generation, net debt/EBITDA stayed flat at 0.3x. The company closed 2022 with TL2,351mn net profit, up from TL39mn a year ago, and EBITDA of TL3,327mn, up by 723% y/y.
EBITDA grew by 409% y/y, yet fell 52% q/q
Mainly thanks to higher electricity prices, Odas’ gross profit and EBITDA jumped by 328% and 409% y/y, respectively, in 4Q22. On the other hand, they were down by 53% and 52% q/q, respectively, due to the significant 151% increase in cost of sales (vs 30% top line growth), as mentioned previously, which resulted in a 38pp decline in the gross margin to 21.1%.
Net profit posted 87% q/q contraction
Despite a 361% rise in net operating profit, bottom line improved only by 3% due to a 259% rise in financial expenses and the absence of deferred tax income which had boosted profits in 4Q21. Net profit contracted by 87% q/q due to weaker operating profitability, higher financial expenses and tax expenses.
We cut our target price to TL11.00/share
As an initial reaction, we cut our 2023 EBITDA and net profit forecasts for Odas to TL3.4bn (from TL5.2bn) and TL2.3bn (from TL4.0bn), respectively, which could have remained somewhat optimistic previously, in our view. Thus, we cut our target price to TL11.00/share (from TL15.50/share). As our updated target price still points to 33% upside potential, we keep our Outperform rating for the shares which trade at undemanding 4.0x EV/EBITDA and 5.3x P/E multiples on our 2023 forecasts.


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