Earnings Report /
Turkey

Tekfen Holding AS: 2Q22 results stronger than expected

  • Tekfen reported TL972mn net income in 2Q22, compared to our estimate of TL669mn net income and cons estimate of TL700mn

  • The company posted TL1,137mn EBITDA in 2Q22, higher our estimate of TL963mn (Ras. Cons: TL820mn).

  • The company reported 14.8% EBITDA margin in 2Q22, higher than our estimate of 13.8% and the consensus of 12.4%.

Zeynep Erman
Zeynep Erman

Equity Research Analyst

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Cemal Demirtas
Cemal Demirtas

Head of Research

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ATA Invest
18 August 2022
Published byATA Invest

Tekfen reported TL972mn net income in 2Q22, compared to our estimate of TL669mn net income and consensus estimate of TL700mn. The deviation from our estimates could be attributed to TL187mn higher than expected EBIT and TL115mn higher than expected financial income&net other income.

The company posted TL1,137mn EBITDA in 2Q22, higher our estimate of TL963mn (Ras. Cons: TL820mn). The company reported 14.8% EBITDA margin in 2Q22, higher than our estimate of 13.8% and the consensus of 12.4%. We believe that the initial reaction to the results will be positive thanks to higher than expected operating performance in 2Q22.

Tekfen will hold conference call today at 16.30 Istanbul time

Tekfen’s revenues increased by 112% y/y to TL7.70bn in 2Q22, 10% higher than our estimate of TL6.98bn. Engineering & contracting revenues increased by 56% y/y to TL2.98bn in 2Q22, 1% lower than our estimate of TL3.01bn. Contracting revenues constituted 39% of the company’s total revenues in 2Q22 (2Q21: 53%). Its backlog remained flat q/q at US$1.41bn in 2Q22. The company added US$182mn new project into its backlog in 2Q22. The largest project in backlog is North Field East Onshore Project EPC-1 Package in Qatar. The remaining backlog from that project was US$388mn (28% of total backlog). Despite 16% decrease in fertilizer sales volume in 2Q22, chemical industry revenue increased by 181% y/y to 4,289mn, which was 19% higher than our estimate of TL3,601mn, thanks to higher fertilizer sales prices in 2Q22. Agri cultural production revenue increased to TL58mn in 2Q22 from TL53mn in 2Q21 while services revenue increased by 171% y/y to TL346mn. Investment revenue increased to TL26mn in 2Q22 from TL12mn in 2Q21.

Higher than expected contracting EBITDA margin in 2Q22. Tekfen’s consolidated EBITDA was TL1,137mn in 2Q22, implying 14.8% margin, higher than our estimate of TL963mn. In more details, its contracting EBITDA margin increased to 10.1% in 2Q22 from 2.5% in 2Q21 (ATA Est.: 8.1%). Chemical industry business EBITDA margin declined to 17.4% in 2Q22 from 20.6% in 2Q21 (ATA Est.:18.4%).

Consolidated net cash increased to TL1,069mn in 2Q22 from TL659mn in 1Q22. Contracting segment net debt remained flat q/q at TL3.3bn in 2Q22. Chemical industry net cash declined to TL1.4bn in 2Q22 from TL1.5bn in 1Q22. Services net cash remained flat q/q at TL138mn in 2Q22. Tekfen’s stand-alone net cash was TL3.1bn (1Q22: TL2.6bn).