Thursday 28 August 2014

Analysis of Aksa

Aksa, a Turkish acrylic fibres producer

Company: Aksa Akrilik Kimya Sanayii AS


Business: A Turkish producer of acrylic fibres. They are dividend into three units: Textile Fibres (micro fibres, high shrinkage fibres, super bright fibres etc.), Technical Fibres (outdoor fibres, homopolymer acrylic fibres and flock tow) and finally Carbon Fibre (becoming a bigger and bigger market it is a joint venture with Dow).

Active: In 50 countries on four continents having 16% of the overall market share of acrylic fibres.

P/E: 9.4

Comment: Please see discussion below. My initial post had 18500 million shares and it is now changed to 185 million shares with significant change in the table.

Contrarian values of P/E, P/B, ROE as well as dividend for Aksa

The P/E for Aksa is excellent with the new updated 9.4 and the P/B is fully acceptable with 1.3 which now then gives a clear go from Graham. The earnings to sales are ok with 8% and the ROE is acceptable with 13.6%.
In the last five years they have had an excellent growth rate of 13.07%! However the inflation rate in Turkey is around 8 to 9% so the growth becomes less impressive still this gives us a motivated P/E around 25 to 30 which means that Aksa is highly undervalued on the market today.
They pay an excellent dividend of 6.7% which on the other hand represents almost 63% of their earnings so that is very high (they claim it will never be below 20% of their earnings).

Conclusion: The P/E, P/B and dividend payments are excellent and Graham gives a clear go signal. The ROE and the amount of dividend they pay out from their earnings are not so good. Still, I think it is a very interesting company with very interesting products and I think that especially their joint venture with DOW will give future earnings in completely new fields for them. I will add them to the Stocks of Interest list.

If this analysis is outdated then you can request a new one.


Vega said...

Hi Fredrik,

Aksa's quantity of shares is 185.000.000. It's P/E ratio is 8.77 and P/B is 1.31 as I see now. Hope this will help you.

Fredrik von Oberhausen said...

Hi Vega,

Where did you get that from?

Because when I look in all the screeners: Google, finanzen etc. then all of them give exactly that number of shares but when I read the annual report the value of the shares is 185 million Lira but the quantity of shares that I found was 18500 million.

Have the number of shares changed with the change of the share value from kurus to Lira? So that it then became a 100 to 1 reverse split with the number of outstanding shares?

Vega said...

I read their annual report. Their numbers are like this(as they reported):
Net Income (profit) : 37.890.000
Equity : 185.000.000
Earnings per Share: 0.20
Quantity of shares: 18.500.000.000

So you are right about quantity of shares. Here in Turkey, companies' amount of equity equal to number of shares. Aksa reported their shares nominal value is 1 Kr and they have 18.500.000.000 shares. I dont know what is their special situation but probably its about process of using kurus. so you must use 185.000.000 as number of shares. Because they reported 0.20 EPS and when you calculate all numbers you will see you should use amount of equity.

Fredrik von Oberhausen said...

Hmmm... The EPS was also something that confused me. Copy/pasted form their 2013 annual report:

Earnings per share for equity holders of the parent (Kr)

Why do they write a (Kr) there? That was an additional thing that confused me and in the end made me decide to use the number of shares as they reported it.

Funny that they use the share capital as share quantity. Thanks for the explanation Vega! I will make an updated analysis of Aksa.