Kardemir Karabuk Demir Celik Sanayi & Ticaret AS (KRDMD) headed for the biggest gain in three weeks after Ak Investment raised the Turkish steelmaker to market outperform on bets construction activity will spur demand for the metal.
The company, based in Karabuk, Turkey, climbed 2.5 percent, set for the largest advance since Feb. 27, to 1.63 liras at 3:54 p.m. in Istanbul. The stock, which rose for the first time in four days, was the second-biggest gainer in percentage terms on the Istanbul Stock Exchange National 100 (XU100) Index, which fell less than 0.1 percent to 83,334.29.
Turkey’s only integrated long steel producer was upgraded from market perform by Ak’s Istanbul-based analyst Bora Tezguler, who raised the price estimate by 19 percent to 2.09 liras. The government’s plan to demolish buildings across Turkey in order to rebuild them as a measure against possible earthquakes may add $2 billion in construction spending a year over the next two decades, Tezguler said.
Kardemir will benefit “as construction activity rises,” he said in an e-mailed report today. Increased spending on construction across the Middle East will also benefit Kardemir, which is “a primary supplier” to the region’s producers, Tezguler said.
About 6.5 million buildings in Turkey are under “disaster risk,” according to the website of the Environment and Urbanization Ministry. Kardemir’s 2012 net income grew 5 percent to 194 million liras ($107 million), missing the 207 million- lira average estimate of seven analysts in a Bloomberg survey.
The shares trade at 6.7 times estimated earnings, compared with 19 times for India-based Tata Steel Ltd. (TATA), 20 times for Japan Steel Works Ltd. (5631) and a multiple of 10 for Turkey-based Eregli Demir ve Celik Fabrikalari TAS (EREGL), data compiled by Bloomberg show.
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