Bottom-line above estimates

Akcansa recorded TRY46mn net income in 2Q12, exceeding both our estimate of TRY37mn and market consensus of TRY40mn. Higher than anticipated profitability was the major reason behind the deviation in the bottom-line to our call. In addition lower tax rate (15% vs. our est: 20%) had a positive impact on net profit, as well.

Domestic revenues recovered q/q with favorable weather conditions

Akcansa’s domestic revenues recovered to TRY235mn in 2Q12 from weak reading of TRY167mn in the previous quarter and indicated a 5% y/y growth over the same period last year. Domestic revenues significantly jumped q/q as the negative impact of harsh weather conditions removed in the 2nd quarter. Akcansa’s domestic revenues were in line with our estimate of TRY239mn. On the other hand, the Company increased its exports  by a sound 24% y/y to TRY54mn (vs. YF est: TRY46mn). All in all, Akcansa managed to increase its total revenues by 10% to TRY286mn vs. our estimate of TRY282mn and market consensus of TRY293mn. We deem that the Company attained y/y stable domestic cement sales volume, along with better prices. We had foreseen y/y nil growth in the domestic sales volume with 7% y/y increase in the domestic cement prices. On the export front, our estimates were y/y stable volume and 5% increase in export prices, however the results depicted that the readings were better than our estimates on the export side.   

Improved profitability mainly due to higher cement prices

Akcansa’s 2Q12 EBITDA margin advanced by 6 pp. q/q and 5 pp. y/y to 23%. We were also expecting the recovery on both front, however the results surpassed our estimate of 20%. We deem that increase in the cement prices was the major reason behind the margin improvement. Additionally, World Bank Commodity Price data points some 7% y/y fall in average crude oil prices and 22% y/y decrease in Australian coal prices in 2Q12, depicting the easing fuel costs. On the other hand, net financial income of TRY5mn was in line with our estimate. Akcansa booked TRY10mn dividend gain from Cimsa Cimento (CIMSA.TI).

Trading with premium to its local + international peers

Akcansa trades at an EV/EBITDA of 8.0x and a P/E of 15.6x based on our 2012 forecasts, indicating 8% and 3% premiums to its peers, respectively. On the other hand, Akcansa’s per ton EV of TRY236 of clinker and TRY164/ton of cement stands 10% and 4% lower than the sector averages, respectively.