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GD         Turnover  mln.

Deutsche Bank Ups Titans Price Target


Deutsche Bank raised the target price for Titan to 16.6 euro from 14.7 euro on reduced discount rate. “We are only fine-tuning our estimates with a negative currency impact being offset by a slightly more upbeat view on end-markets (mainly Greece). This, together with a lower discount rate (now in line with rest of the mid-cap cement names), explains our new higher target price. Our valuation is DCF-toequity based with 11.7% cost of equity (beta 1.2, risk-free rate 4.5% and risk premium 6%) and a 2.5% perpetual growth rate (driven by inflation). We also cross-check our results against multiples comparisons. Key risks relate mainly to a quicker recovery/worsening in Titans end-markets (US, Egypt and/or Greece), political instability in Egypt and/or Greeces” says Deutsche Bank.

The bank also explains that since Titan is the most expensive cement name in the European space at 9.5x EBITDA 2014E vs. the sector at 6.8x; sticks to its Hold rating – we see better value elsewhere in the sector.

As far as the Q3 results are concerned (they are due on 12 November) Deutsche Bank expects Q3 sales to decline 0.4% YoY to E298m with a 5.6% negative currency impact (mainly Egyptian pound and USD) offsetting 5.2% volume growth (supported by exports from Greece). “This should translate into 10% EBITDA growth with a strong margin expansion in North America and a slight margin improvement in Greece off-setting EBITDA declines in South Eastern Europe and Egypt due to weak volumes”.


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