Aselsan reported TL2,140mn net income in 2Q22, 46% higher than our estimate of TL1,463mn and 23% higher than consensus estimate of TL1,745mn. Despite higher than expected financial expense, significantly higher than expected EBIT and net other income led to higher than expected net income in 2Q22.
The company posted TL1,669mn EBITDA in 2Q22, higher than our estimate of TL1,291mn and consensus estimate of TL1,456mn. The company reported 25.8% EBITDA margin in 2Q22, 56bps higher than our estimate of 25.2% (Ras. Cons:24.3%).
Based on our 2022 estimates, Aselsan is trading at 9.5x EV/EBITDA, implying 9% discount compared to its 5yr historic multiple. We maintain our “Marketperform” recommendation for Aselsan with 12M TP of TL28.92, implying 21% upside potential.
Revenue was 26% higher than our estimate of TL5.1bn in 2Q22 due to higher than expected deliveries. Revenues increased by 70% y/y to TL6.48bn (-10% in US$ basis) in 2Q22. Aselsan’s backlog declined by 5% q/q to US$7.9bn. The company added US$309mn new project into the its backlog in 2Q22. According to the company presentation, TL denominated backlog constituted 17% of total backlog whereas Euro and US$ denominated backlog constituted 37% and 46% of total backlog, respectively as of 2Q22.
EBITDA increased by 46% y/y TL1,669mn in 2Q22. The company’s gross margin declined by 1,072bps y/y to 32.5% which was 203bps higher than our estimate of 30.5% while the company’s Opex/Net Sales ratio declined by 695bps y/y to 8.9% which was higher than our estimates of 8.0%. The company reported 25.8% EBITDA margin in 2Q22 (ATA Est: 25.2%), higher than the company's guidance range of 20-22%. We believe that higher than expected 2H22 results pose an upside risk to the company’s EBITDA margin guidance.
Aselsan maintained its guidance for 2022. The company management maintanined (1) its topline growth guidance at “>25%” which was inline with our expectation of 31% y/y growth (2) its EBITDA margin guidance at “>22%” inline with our estimate of 24.5% and (3) its CAPEX guidance at TL5.0bn for 2022 (ATA Est.:TL5bn).
The company’s net debt increased to TL6.22bn in 2Q22 from TL5.65bn in 1Q22. The company’s adjusted net working capital needs* (ST+LT NWC inc. prepaid expenses and deferred income) increased by TL2,469mn q/q to TL TL28,684mn in 2Q22.