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Earnings Review Celebi Hava Servisi Ground Handling Weak Performance In 1Q10, Celebi posted TRL3.4mn net

Earnings Review

Celebi Hava Servisi

Ground Handling

Weak Performance

In 1Q10, Celebi posted TRL3.4mn net loss, higher than the consensus estimate of TRL1.3mn due to advisory expenses stemming from Indian cargo warehousing and ground handling operations.

Ground Handling: Revenues increased by 10% YoY on the back of roughly similar increase in unit sales (number of flights served). As Mumbai operations became operational last July, the profitability of the operation was rather low and diluted the overall margin of the segment. Moreover, appreciation of TRL and INR against hard currencies also ate into profitability as almost 80% of the segment’s revenues are hard currency (mainly euro) based whereas 80% of its costs are local currency based. Segment’s EBITDA margin declined remarkably by 430 bps to -0.1% in 1Q10.

Air Cargo Warehousing: Cargo warehousing operations made up for the income loss from the terminal management operation terminated in September 2009. As Indian operations became online in 4Q09, revenues increased sharply by 411% YoY in 1Q10. EBITDA margin of the segment increased from 15.9% in 1Q09 to 40.8% in 1Q10 as Indian operation has an EBITDA margin of more than 45%.

Net Debt: Net debt increased by TRL17.1mn to TRL60.8mn in 1Q10 due to ongoing investments.

Valuation: We expect Celebi to post TRL380mn revenue (up 22%), TRL87mn EBITDA (down 11%) and TRL35mn net income for 2010. On 2010 estimates, Celebi trades on 5.9x EV/EBITDA and 8.7x P/E. Our fair value for the Company is TRL16.5/share, indicating an upside of 5%.

14 May 2010

Marketperform 20.00 CLEBI ISE 100 Relative 40% 30% 16.00 20% 12.00 10% 0% 8.00 -10%
Marketperform
20.00
CLEBI
ISE 100 Relative
40%
30%
16.00
20%
12.00
10%
0%
8.00
-10%
4.00
-20%
0.00
-30%
Stock Data (as of May 13, 2010)
Bloomberg
CLEBI.TI
Close (TRL)
15.80
Fair Price (TRL)
16.50
Mkt cap (TRLmn)
384
Free float (%)
22.0%
Celebi Holding
Key Owners (%)
53.0%
Foreign ownerhsip in FF
32.2%
Shares Outstanding
24,300,000
Avg. 6m Daily Vol. ($m)
2.3
ISE-100 (TRL)
57,930
Performance
1M
3M
12M
Absolute (%)
-8.8
1.6
96.1
Relative (%)
-8.6
-10.4
11.2
Key Ratios (%)
2008
2009
2010E
EBITDA margin
27.8
31.6
23.0
Dividend yield
6.3
9.4
8.0
Net debt/equity
12.7
36.4
31.2
ROA
13.5
9.3
12.0
ROIC
30.4
39.9
33.1
26.9
22.2
25.0
ROE
Kenan Cosguner, CFA
kenan.cosguner@teb.com.tr
+90 (216) 636 45 31
TEB Investment Institutional Sales
Direct:
Fax:
+90 (216) 636 45 05
+90 (216) 636 61 00
Mail: 1H1H1Hteb.icm@teb.com.tr
2H2H2Htebicm@bloomberg.net
05/09
06/09
07/09
08/09
09/09
11/09
12/09
01/10
02/10
03/10
04/10
Exhibit 1: Celebi Hava Servisi Quarterl y Consolidated Financial Data (TRLmn)   YoY% YoY %

Exhibit 1: Celebi Hava Servisi Quarterly Consolidated Financial Data (TRLmn)

 

YoY%

YoY %

QoQ%

Income Statement

2008

2009

Q109

Q409

Q110

(2009/2008) (1Q10/1Q09)

(1Q10/4Q09)

 

Net Sales Gross Profit Operating Expenses Operating Profit EBITDA Net Other Income Financial Inc. (exp) Minority Interest EBT Taxation Net Income

302.0

86.8

-42.2

44.6

83.8

1.9

-0.7

5.3

51.2

-16.1

35.04

311.1

54.4

63.8

62.3

3%

14%

-2%

108.8

9.3

17.7

15.3

25%

64%

-14%

-46.8

-9.8

-11.6

-12.8

11%

31%

10%

62.0

-0.5

6.1

2.4

39%

n.m.

-60%

98.3

10.0

11.8

8.0

17%

-20%

-32%

-21.6

-0.3

-16.5

-2.9

n.m.

991%

-82%

-1.5

-20.7

0.4

0.1

117%

n.m.

-71%

-0.3

6.5

-0.3

-1.4

n.m.

n.m.

330%

38.7

-21.5

-10.4

-1.8

-24%

-92%

-83%

-10.9

-1.2

0.1

-1.6

-32%

39%

n.m.

27.8

-16.1

-10.2

-3.4

-21%

-79%

-67%

Operating Ratios

 

Gross margin

28.7%

35.0%

17.1%

27.7%

24.5%

EBITDA margin

27.8%

31.6%

18.4%

18.5%

12.8%

Net margin

11.6%

8.9%

n.m.

n.m.

n.m.

Balance Sheet Data

 

Cash & Equivalents S/T Fin. Debt L/T Fin. Debt Net debt (cash) Book Value Total Assets Net debt (cash) / Equity

53.6

15.1

55.1

16.6

130.3

268.1

13%

94.6

43.9

94.6

96.7

76%

120%

2%

35.9

26.7

35.9

48.4

137%

81%

35%

102.4

70.5

102.4

109.0

86%

55%

6%

43.7

53.3

43.7

60.8

164%

14%

39%

120.1

69.9

120.1

127.0

-8%

82%

6%

327.6

240.9

327.6

344.7

22%

43%

5%

36%

76%

36%

48%

 

Exhibit 2: Segmental Breakdown (TRLmn)

 
 

2008

2009

YoY

1Q09

1Q10

YoY

 

Revenue

Ground Handling

217.2

228.1

5%

38.7

42.7

10%

Terminal management

56.6

51.7

-9%

10.6

-

n.m.

Cargo Handling

22.3

25.3

13%

3.7

18.7

411%

Others & Elimination

5.9

6.0

3%

1.5

0.9

-42%

Total

302.0

311.1

3%

54.4

62.3

14%

EBITDA

Ground Handling

33.7

47.9

42%

1.6

-0.1

n.m.

Terminal management

38.7

38.2

-1%

7.2

-

n.m.

Cargo Handling

9.5

10.2

7%

0.6

7.6

1209%

Others & Elimination

1.8

2.0

11%

0.6

0.4

-26%

Total

83.8

98.3

17%

10.0

8.0

-20%

EBITDA

Ground Handling

15.5%

21.0%

4.2%

-0.1%

 

Terminal management

68.5%

73.9%

68.6%

N.M.

Cargo Handling

42.6%

40.3%

15.9%

40.8%

Others & Elimination

30.9%

33.5%

37.7%

48.3%

Total

27.8%

31.6%

18.4%

12.8%

TEB Investment Macro Estimates 2008 2009E 2010E 2011E TRY/US$ (average; CB Bid rate) O/N borrowing

TEB Investment Macro Estimates

2008

2009E

2010E

2011E

TRY/US$ (average; CB Bid rate) O/N borrowing rate (end of period; %) CPI (annual-%) GDP growth rate (%)

1.2944

1.5477

1.5424

1.6335

15.0

6.5

9.0

11.0

10.1

6.5

7.5

8.0

0.9

-4.7

3.7

3.9

TEB Investment: Stock Rating Definitions

TEB Rating

Definition

Investment Horizon

Outperform

The stock's return including dividends is expected to be higher than the ISE-100 index over the next 12 months.

1 year

Marketperform

The stock's return including dividends is expected to be similar to the ISE-100 index over the next 12 months.

1 year

Underperform

1 year

The stock's return including dividends is expected to be less than the ISE-100 index over the next 12 months.

TEB Investment TEB Kampüs D Blok Saray Mahallesi Küçüksu Caddesi Sokullu Sokak No:7 34768 Ümraniye

TEB Investment

TEB Kampüs D Blok Saray Mahallesi Küçüksu Caddesi Sokullu Sokak No:7 34768 Ümraniye / İstanbul

Phone : +90 (216) 636 44 44

Fax: +90 (0216) 631 44 00

Trading

Bulent Levi

Director

Kurt Atay

Manager

Inci Kalkavan

Assistant Manager

Institutional Sales

Ali Kerim Akkoyunlu

Assistant General Manager

Tunc Ural

Director

Hasan Sevket Colakoglu

Director

Henza Tukel

Associate

Research

Selim Yazici

Co-Head of Research, Banks

Fazil Zobu

Co-Head of Research, Strategy

Kenan Cosguner

Logistics & Aviation, Food & Beverage, Fertilizers, Media

Didem Ozatalar

Automotive, Retail,

Durables,

Conglomerates

Ozkan Ozkaynak

Quantitative Research

Cagdas Dogan

Banks, Strategy

Ozgur Guler

Telecoms, Cement

bulent.levi@teb.com.tr

+90 (216) 636 45 00

kurt.atay@teb.com.tr

+90 (216) 636 45 27

inci.kalkavan@teb.com.tr

+90 (216) 636 45 15

ali.akkoyunlu@teb.com.tr

+90 (216) 636 45 39

tunc.ural@teb.com.tr

+90 (216) 636 45 06

hasansevket.colakoglu@teb.com.tr

+90 (216) 636 45 09

henza.tukel@teb.com.tr

+90 (216) 636 45 18

selim.yazici@teb.com.tr

+90 (216) 636 45 33

fazil.zobu@teb.com.tr

+90 (216) 636 45 35

kenan.cosguner@teb.com.tr

+90 (216) 636 45 31

didem.ozatalar@teb.com.tr

+90 (216) 636 45 29

ozkan.ozkaynak@teb.com.tr

+90 (216) 636 45 30

cagdas.dogan@teb.com.tr

+90 (216) 636 45 38

ozgur.guler@teb.com.tr

+90 (216) 636 45 32

The information and opinions in this report were prepared by TEB Investment solely for information purposes, based on information available as of the date of this report. TEB Investment does not undertake to advise you of changes in the information or opinions set forth herein subsequent to such date.

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