Petkim posted TL1,495mn net income in 3Q22, higher than our estimate of TL708mn and consensus estimate of TL1,006mn. Despite lower than expected EBIT, higher than expected income from asset revaluation & net other income and higher than expected tax income led to higher than expected net income in 3Q22.
The company posted TL687mn EBITDA in 3Q22, lower than our estimate of TL819mn (consensus estimate:TL874). The company’s EBITDA/ton declined to US$56 in 3Q22 (ATA Est: US$70) from US$120 in 2Q22. Please note that the company recorded US$12mn inventory loss in 3Q22 (2Q22: US$13mn).
Petkim will hold conference call today at 16.00 Istanbul time.
Revenues are in-line with our estimates. Despite 6% y/y decline in sales prices, Petkim’s revenues increased by 111% y/y to TL14,201mn in 3Q22 (ATA Est: TL13,990mn) thanks to 7% higher sales volume and appreciation of US$ against to TL by 110% y/y in 3Q22. The company generated 516K gross production in 3Q22, resulting in CUR of 66% in 3Q22 (ATA Est.: 75%). The company’s total sales volume of 687K tons was 5% higher than our estimate of 656K due to higher than expected trading goods sales volume in 3Q22.
Negative outlook for core spread. Ethylene prices declined by 35% q/q to US$937/ton in 3Q22 while naphtha prices declined by 26% q/q to US$676 in the same period. Thus ethylene-naphtha spread declined by 52% q/q to US$261/ton in 3Q22. So far in 4Q22 the spread averaged at US$135/ton compared to our estimate of US$341/ton in our model. Due to increasing naphtha prices and declining ethylene prices, the spread declined US$111/ton in 4 November 2022. If the spread remains at recent level of US$111/ton, we foresee a downside risk to our 2022 estimates.
Net debt increased to TL14.1bn in 3Q22 from TL12.7bn in 2Q22. The company’s net debt / EBITDA ratio increased to 2.7x in 3Q22 from 2.2x in 2Q22. The company’s capex was TL1.1bn in 3Q22.