12M-TP is revised up to TL43 from TL28, implying 49% upside. EREGL remains one of our top picks.
Based on our revised estimates, we revised up our 12-mnth TP to TL43 from TL28 now implies 49% upside potential including 12.5% cash dividend potential.
We expect EREGL to distribute TL3.96/shr cash dividend in 2022E from 2021E earnings.
Considering the indications and run rates for 1Q22E, we still see an upside risk to our 2022E estimates and valuation.
Overall, we expect EREGL’s net income to decline to US$1.54bn in 2022E from record-high US$1.74bn in 2021E. In TL terms, we expect EREGL to record TL21.8bn in 2022E, implying a 42% y/y increase.
Based on our 2022E, EREGL is currently trading at 3.4x EV/EBITDA and 5.2x P/E, implying 30% and 17% discount to its historic averages.
Our 2021E estimate of TL15.5bn net income is in line with consensus estimates TL15.5bn. However, our net income estimate of TL21.8bn for 2022E stands 32% above Bloomberg consensus of TL16.5bn.
We expect EREGL to realise 2.16mn tons of sales volume and EBITDA/ton of US$392, implying an EBITDA of US$844 mn in 4Q21.
Thanks to strong operating results, EREGL will record US$795mn PBT in 4Q21E but higher effective taxes will mitigate the positive impact of strong operating results on the bottomline and net income will be US$396mn.
In full-year 2021E, we expect EREGL to record 8.3mn tons of sales volume and EBITDA/ton of US$357, implying EBITDA of US$.96bn, which is historic high level. Thanks to record-high operational profitability, we expect EREGL to increase its net income by 267.5% to US$1.74bn in 2021E.
We believe that EBITDA/ton of US$419 in 3Q21 was the peak and gradual decline is EBITDA/ton is likely in the following quarters. However, we still expect limited decline in EBITDA/ton for 1H22 due to balanced supply-demand conditions and much less pressure from China and other global steel players.
After a peak of US$419 in 3Q21, we expect EBITDA/ton decline to US$392 in 4Q21E and US$314 in 1Q21E due to lagging impact of higher coking coke prices. In full-year 2022E, we expect sales volume of 8.5mn tons and EBITDA/ton US$280, implying EBITDA of US$2.4bn, which is likely to be down by 19% y/y but still 76% above the 10-yr historic average of US$1.3bn.
Overall, we expect EREGL’s net income to decline to US$1.54bn in 2022E from record-high US$1.74bn in 2021E. In TL terms, we expect EREGL to record TL21.8bn in 2022E, implying 42% increase.
Based on our 2022E, EREGL is currently trading at 3.4x EV/EBITDA and 5.3x P/E, implying 30% and 17% discount to its historic averages.
Based on our revised estimates, we revised up our 12-mnth TP to TL43 from TL28, now implies 49% upside potential including 12.5% cash dividend potential. We expect EREGL to distribute TL3.96/shr cash dividend in 2022E from 2021E earnings.
Considering the indications and run rates for 1Q22E, we still see an upside risk to our 2022E estimates and valuation.