Earnings Report /
Turkey

Sisecam: Better than expected results on all fronts

  • Sisecam reported TL 5,379mn net income in 2Q22 which was 37% above our estimate and 35% above consensus estimate.

  • SISE'S EBITDA surged by 204% y/y to TL5,637mn, which was 8% higher than our estimate and 5% higher than consensus.

  • The company generated 24.2% EBITDA margin in 2Q22, 159bps higher than our estimate of 22.6%

Mustafa Bayram
Mustafa Bayram

Equity Research Analyst

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ATA Invest
5 August 2022
Published byATA Invest

Sisecam reported TL 5,379mn net income in 2Q22 which was 37% above our estimate of TL 3,935mn and 35% above consensus estimate of TL3,977mn. Higher than expected operating profit, higher financial income and lower taxes were the main reasons behind stronger than expected net income. 

The company’s EBITDA surged by 204% y/y to TL5,637mn in 2Q22, which was 8% higher than our estimate of TL5,201mn and 5% higher than consensus estimate of TL3,977mn. The company generated 24.2% EBITDA margin in 2Q22, 159bps higher than our estimate of 22.6% (Rasyonet Consensus: 23.1%).

Based on 22E estimates, the company currently trades at 4.3x EV/EBITDA and 4.6x P/E multiple, implying 18% and 30% discount to historical averages.

Top line increased by 228% y/y to TL23.3bn in 2Q22. Sisecam’s net sales increased by 228% y/y to TL23.26bn in 2Q22, implying a 94% topline growth in Euro terms.   Adjusting for 69% inorganic growth, organic growth was 159% y/y in 2Q22. Topline growth of 228% was mainly driven by 218% growth in Architectural glass and 424% growth in chemicals which is also supported by inorganic growth. Chemicals had the highest share in consolidated revenues with 30% in 2Q22 followed by Architectural segments with 27% and Glass packaging with 18.3% share in consolidated revenues. The increase in the share of Chemicals could partially be attributed to inorganic growth in soda business. 

EBITDA was 8% higher than our estimate. Consolidated gross margin was 37.8% in 2Q22, which was 27bps higher than our estimate of 37.5%. Despite increase raw material prices and energy surcharges, Sisecam managed to pass through cost increases to their product prices supported by strong demand. Consolidated OPEX/Net sales ratio was 103bps higher than our estimate of 19.0%. EBITDA margin of 24.2% was 159bps higher than our estimate of 22.6%. Chemicals’ contribution on EBITDA margin increased by 365bps q/q to %37 from %33 in 1Q22. Flat Glass’ contribution on EBITDA margin increased by 25bps q/q to %39 from %38 in 1Q22. But Glassware’s contribution on EBITDA margin decreased by 194bps q/q to %7.7 from %10 in 1Q22.

Net debt was up by 29% q/q to TL16.5bn in 2Q22. Main drivers behind the increase in net debt were 1) consolidation of CINR and Pacific Soda since 1Q22, 2) depreciation of TL against FX. Net Debt/EBITDA declined to 1.15x in 2Q22 from 1.20x in 1Q22.